The capping of Canada’s energy sector’s emissions, planned by the Trudeau government, will cost the Canadian economy $6 billion with little effect on the environment, according to a think tank researcher.“Each time Ottawa forces the Canadian energy sector to contract, it is foreign producers who win,” says Gabriel Giguère, public policy analyst at the The Montreal Economic Institute. “Ottawa does not have the means to affect global demand, so reducing local supply will only end up exporting jobs and tax revenues.”Federal Environment Minister Steven Guilbeault announced Thursday that Ottawa would aim to cap the oil and gas sector’s emissions at 35% to 38% below 2019. However, companies are allowed to purchase carbon credits or contribute to a decarbonation fund, meaning the effective reduction would be between 20% and 23% compared to 2019 levels.An MEI study published last year devised a methodology calculating the contraction in economic activity that would stem from such a measure. Based on this methodology, MEI estimates the proposal would cost Canada’s economy upwards of $6 billion per year in wages, local consumption, tax revenues and other metrics if fully implemented.Without compensation measures such as carbon credits and decarbonation funds, the economic cost would have been upwards of $32.3 billion.The study also notes the industry has had some success in reducing its emissions, considering that a barrel of oil produced today emits 33% less CO2 equivalent than it did in 1990.Giguère says the federal government is making a mistake by targeting a specific sector.“Whether a tonne of CO2 is emitted during the production of a barrel of oil in Alberta, or the manufacture of an automobile in Oshawa, its impact on the climate is the same,” explains Giguère.“By targeting the Canadian energy sector, the Trudeau government seems to be engaging in an ideological crusade rather than introducing a policy based on the facts.”A separate study by Giguère also released by the MEI today said federal airport fees, security rents and fuel taxes contribute massively to air travel costs. The MEI estimates that in 2022-2023 they amounted to a total of $419 billion, a 42.5% increase over the past ten years.On May 1 2024, the air travellers’ security charge will be $34.42 for an international flight, whereas such a fee in the US does not exceed CDN $15.30. Similarly, the fuel tax is 4 cents per litre in Canada and just CDN 1.55 cents in the U.S.“Ottawa prefers to treat our airports as cash cows, rather than the essential transportation infrastructure that they are,” Giguère said.“Whether a ticket is bought for a vacation or to reach our remote regions, these taxes have a negative effect on families’ budgets.”
