CAPP commissioned report shows a stringent emissions cap could cost Canada 51,000 jobs and $247 billion in GDP contributions by 2035

/EIN News/ -- CALGARY, Alberta, May 27, 2024 (GLOBE NEWSWIRE) -- An economic impact assessment report completed by S&P Global Commodity Insights for the Canadian Association of Petroleum Producer (CAPP) shows that a scenario where a stringent 40% emissions cap is applied from 2030 could lead to significant cuts in domestic conventional oil and natural gas production, reaching a one million barrel of oil equivalent per day (boe/d) reduction by 2030 relative to the reference case. A mandated stringent 55% emission cap by 2035 would result in a reduction of two million boe/d in 2035 compared to the reference case.

Conversely, the assessment shows that the conventional industry could deliver $1.3 trillion in GDP contributions and support 383,000 Canadian jobs annually by 2035 with just an 8 percent increase in production if it were permitted to add drilling and export infrastructure under current policy frameworks.

CAPP commissioned the assessment to better understand the potential economic implications of different production scenarios, including one where a fixed emissions cap is imposed upon the sector. The report only focused on the impact on conventional production and did not include oil sands production.

The S&P Global Commodity Insights analysis explored three alternative production scenarios under parameters requested by CAPP for the conventional oil and natural gas sector to 2035.

• The Reference Case forecasts conventional oil and natural gas production under current policy conditions.
• The Stress Case forecasts production under a stringent 40% emissions cap mandated for 2030.
• The High Case forecasts production with the assumption of additional investment into export and production infrastructure.
  

The Reference Case forecasts that under current policy conditions conventional oil and natural gas production could reach six million boe/d by 2030 and remain near that level to 2035. In comparison, the Stress Case shows that a mandated 40% emission reduction by 2030, relative to 2021, could lead to one million boe/d lower production in 2030 and a two million boe/d reduction by with a mandated 55% reduction by 2035.

According to the economic assessment:

• The Stress Case results in total $75 billion lower upstream investment spend across the 2024 to 2035 period compared to the Reference Case. This would result in $247 billion lower GDP contribution between 2024 and 2035 compared to the Reference Case.
• The Conventional oil and natural gas sector could support an average of 347,000 jobs annually under the Reference Case. The Stress Case has 51,000 fewer jobs supported annually across Canada.

The report also explored scenarios with higher economic benefit to Canada. Both the Reference and High Case scenarios show production can grow while the investments in decarbonization leads to lowering emission intensity.

• The High Case shows that 8% growth in conventional oil and natural gas production, compared to the Reference Case out to 2035, would support an additional 36,000 jobs annually across Canada and over $100 billion in additional GDP contributions to 2035 with debottlenecking of existing pipeline and LNG export capacity.
• Compared to the Stress Case, the High Case scenario shows an additional $125 billion in investment from the conventional sector, $351 billion in cumulative GDP contributions, and 87,000 more jobs supported annually out to 2035.

The report can be found on CAPP’s website.

Quotes from CAPP President & CEO Lisa Baiton

“The proposed emission cap framework for the oil and natural gas sector is unnecessary and should not proceed. Under existing proven policy measures the conventional oil and natural gas sector is growing production while lowering emissions. Instead, Canada should give the policies in place time to work while collaborating with industry and provinces on pragmatic solutions to deliver emissions reductions in the short term while positioning Canada and our energy industry for long-term success.”

“The Organization for Economic Cooperation and Development (OECD) is forecasting Canada’s per capita GDP will perform the worst out of all its 38 member nations for the next 40 years. To change the direction of our economy we need to support growth in our largest job creators. The S&P Global Commodity Insights report shows the conventional oil and natural gas sector holds significant potential for even greater contributions to the Canadian economy through thousands of new jobs, billions in revenues to governments and over a trillion dollars in GDP over the next 12 years.”

“Declines in production forced on the industry by a stringent emissions cap will result in significant job losses for Canadians, severe impacts on the economy and our GDP, and have the potential to compromise Canada’s energy security and prosperity. Canada has a choice. We can discourage growth in one of the country’s largest industries and pursue aggressive climate policy at the highest cost to Canadians, or we can encourage growth and prosperity while still delivering emissions intensities reductions.”

“Instead of supporting emissions reduction in upstream operations, a new cap and trade system adds costs and uncertainty, which stifles investment and will force producers to curtail production to reach compliance. Lower Canadian oil and natural gas production does nothing to curb global demand growth and will have no impact on global emissions. The loss of Canadian oil and natural gas exports will be made up by other nations, who may not share Canada’s high environmental and emissions standards.”

“Both the Reference and High Case conventional oil and gas production forecasts would contribute to over $1 trillion in cumulative GDP and support up to 383,000 jobs annually out to 2035. CAPP believes this is a conservative estimate of Canada’s growth potential given the country has one of the largest undeveloped resource bases in the world.”

About CAPP

The Canadian Association of Petroleum Producers (CAPP) is a non-partisan, research-based industry association that advocates on behalf of our member companies, large and small, that explore for, develop, and produce oil and natural gas throughout Canada. Our associate members provide a wide range of services that support the upstream industry.

CAPP’s members produce nearly three quarters of Canada’s annual oil and natural gas production and provide approximately 450,000 direct and indirect jobs in nearly all regions of Canada. According to the most recently published data, the industry contributes over $70 billion to Canada’s GDP, as well as $45 billion in taxes and royalties to governments across the country. CAPP is a solution-oriented partner and works with all levels of government to ensure a thriving Canadian oil and natural gas industry.

We strive to meet the need for safe, reliable, affordable, and responsibly produced energy, for Canada and the world. We are proud to amplify industry efforts to reduce GHG emissions from oil and gas production and support Indigenous participation and prosperity.

Contact:
                    
                    Jay Averill
                    Director, Communications, CAPP
                    403-267-1151
                    Jay.Averill@capp.ca