New study examines economic impacts of reaching net zero with or without oil and gas

OTTAWA, ON, May 11, 2023 /CNW/ - The Public Policy Forum today released a new study that found a gradual phase out of Canadian oil and gas production as a means of achieving net-zero emissions in this country would introduce greater costs to the economy without a corresponding environmental benefit, versus investments to decarbonize oil and gas, such as carbon capture

The study, entitled The $100 Billion Difference: Relative Costs of Two Net Zero Approaches, compared two possible scenarios for achieving net zero emissions: In one scenario, Canada pursues broad-based, sector-agnostic emissions reductions, as with a carbon tax, and in the second, oil and gas production is phased out as a matter of targeted policy.

The study found that both pathways were successful in achieving net zero emissions, but the latter imposed an additional $100 billion in lost GDP by 2050, with some $60 billion of the losses occurring in the province of Alberta.

The study was commissioned from Vancouver-based Navius Research Inc., an independent and impartial research firm that models the effect of climate and energy policy on the economy and environment. The results were stress-tested across a range of assumptions and found that while the degree of severity may vary, the overall findings remained the same.

The report is not intended to be an evaluation of current or proposed government policy, nor is it intended to endorse or oppose the implementation of any future policy. Rather, the report analyzed potential outcomes of two possible pathways to achieving net-zero emissions, both of which remain prominent in public dialogue. The research is intended to inform the decision-making of policymakers and stakeholders, as well as identify areas for further research.

"There is no way of doing nothing in the face of the climate emergency. Urgent and sustained action is required," said PPF President and CEO Edward Greenspon. "The question is what course produces the best environmental outcome for Canadians while causing the least disruption possible on the way to net zero."

The report provides five key takeaways for climate policymakers:

1. Canada is not on track to achieve net zero on the basis of current policy or 2030 targets.
2. An accelerated phaseout of fossil fuel production introduces economic pain with no added environmental gain.
3. The economic burden of an accelerated fossil-fuel phaseout falls disproportionately on oil and gas producing provinces, particularly Alberta.
4. The incomes of everyday Canadians decline as well under this particular scenario.
5. Canada's trade balance weakens with the curtailment one way or another of its largest export category and it could become a net oil importer.

The report arose from PPF's Energy Future Forum, a project launched in 2019 to identify practical measures that help Canada meet or exceed its 2030 emissions targets on the way to a net zero future, and that strengthen an innovative economy, deepen shared prosperity and enhance national unity. The Energy Future Forum includes leaders from business and government, along with academic, environmental and Indigenous organizations, comprising participants from across Canada.

SOURCE Public Policy Forum

Alison Uncles, VP, PPF Media and Communications, Public Policy Forum, [email protected]