Canadian Manufacturing

Oilsands emissions cap to cost billions, have ‘meagre’ global impact, report says

Fraser institute study says Alberta will trade $250 billion in lost production for a 0.035 per cent reduction in global greenhouse gas emissions



Alberta's oilsands has long been the centre of a debate over the environmental impacts of resource extraction

Alberta’s oilsands has long been the centre of a debate over how to weigh economic benefits against a heavy environmental toll

CALGARY—According to a new Fraser Institute study, an Alberta government plan to cap carbon emissions in the province’s oilsands will cost the oil and gas industry billions, but be largely ineffective when it comes to curbing greenhouse gas emissions.

“There is a serious imbalance between the high costs of Alberta’s proposed carbon emissions cap to the economy and the minimal benefits that could be realized in greenhouse gas emission reductions,” Ken Green, senior director of the right-leaning think tank’s Centre for Natural Resources and the report’s co-author, said.

Currently, Alberta’s oilsands emit approximately 70 megatonnes of emissions per year, or about one-quarter of the province’s overall count. But a new limit, proposed by the NDP government last year, will cap the region’s emissions at 100 Mt. While critics say the cap does not go far enough to address environmental damage, oilsands supporters argue the limit will stifle economic growth in the Western Canada province.

The new study says the cap could reduce potential oilsands production by more than three billion barrels between 2025 and 2040, costing the economy more than $250 billion. Meanwhile, the global GHG emissions avoided would be a “meagre” 0.035 per cent. With oilsands emissions already approaching the limit, the cap could begin taking its toll on the region as early as 2025.

“This will impose a very high cost on Canadians and the economy, and using current projections, we could start to feel the pinch in less than 10 years,” Green said.

“Constraining development of Canadian energy only limits economic opportunities for Canadians. Governments should keep that in mind when developing such policies,” he added.

Part of an ongoing debate about the economic benefits of oilsands development versus environmental toll, improvements in extraction techniques could allow the oil-rich region to continue ramping up development without reaching the 100 Mt limit. In fact, a number of companies operating in the oilsands have endorsed the emissions cap, identifying it as a necessary challenge.

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