Lennie Kaplan spent over two decades in the public service of Alberta.The Carney government’s renewed commitment to achieve net zero greenhouse gas emissions (NZE) by 2050, aided by the Alberta government, in the Canada-Alberta MOU could cost about $2.1 trillion in lost economic activity from business-as-usual (BAU) between 2025 and 2050 and lead to 351,000 lost jobs from BAU by 2050. These are among key insights based on my analysis of data drawn from a 2024 custom research project by Navius Research using its highly regarded gTech/IESD model.Policy goals, such as Canada NZE 2050, need to be backed up with rigorous modeling and impact analysis. Unfortunately, the federal government does not appear to have provided sufficient updated information on Canada NZE 2050 to allow citizens to fully assess its economic and fiscal impact. I believe that the analysis presented here helps fill that critical void.In the analysis, I look at the difference between two scenarios, a Rollback Policy Scenario (reference case) and a Net Zero Policy Scenario (Canada NZE 2050). The Rollback Policy Scenario (reference case) includes the federal Output Based Pricing System (OBPS)/Alberta TIER headline price rising to $170 per tonne by 2030, federal and provincial investment tax credits (ITCs), and policies implemented at the provincial level. All federal climate policies are rolled back, including the proposed Oil and Gas Emissions Cap (OGEC), the Clean Electricity Regulations (CER), and the 75% oil and gas methane reduction requirement below 2012 levels by 2030. The Canada NZE 2050 includes the same policies as under the Rollback Policy Scenario, but after 2030, the scenario mandates NZE by 2050. Canada NZE 2050 assumes the federal government works with provincial governments, with the provinces, such as Alberta, taking the lead, in designing climate change policies and regulations, to pursue the lowest cost policy path to NZE. I use reference case assumptions for oil prices and the cost of various emissions reduction technologies, including CCUS and hydrogen, and assume the availability of small modular nuclear reactors (SMRs) and direct air capture (DAC). These emissions reduction technologies are all critical elements of the federal government’s climate competitiveness strategy..Key insights from my analysis comparing the Rollback Policy Scenario to Canada NZE 2050 reveal that Canada’s cumulative economic activity is projected to be $2.1 trillion (2021$) or 2.5% lower between 2025 and 2050. Additionally, total employment, measured in full-time equivalents (FTEs), is expected to decrease by 351,000 or 1.5% by 2050. Furthermore, Canada’s oil production is anticipated to decline by 2.1 million barrels per day or 33.6% by 2050.These negative impacts could be understated as they depend on aggressive uptake of high-cost emission reduction technologies, such as direct air capture (DAC). The Carney government must consider “the practical and achievable uptake of abatement technologies in a real-world setting - supply chain constraints, labour availability, technological readiness, project collisions (multiple projects simultaneously competing for resources, including but not limited to, other nations’ incentives), insufficient provincial investment supports, and competing access to limited capital.”Openness and transparency require the Carney government to prepare and release an updated comprehensive economic and fiscal impact analysis of the costs of pursuing Canada NZE 2050. On the basis of what I have found thus far about the costs of Canada NZE 2050, the Carney government should scrap its NZE policy and work with the provinces to establish realistic and achievable emission reduction targets.Lennie Kaplan spent over two decades in the public service of Alberta, including as a senior manager in the Fiscal and Economic Policy Division of the Ministry of Treasury Board and Finance, where he worked on cross-ministry initiatives evaluating the fiscal and economic impacts of federal and provincial energy and climate change policies.
