Lennie Kaplan was 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.New analysis drawn from the Rystad Energy UCube comprehensive data set reveals that nearly $450 billion in Alberta’s oil sands sector upstream investment could be wiped out under the Carney-Smith NZE agenda. Investment risk for the oil sands sector is defined as the cumulative reduction in upstream exploration and production (E&P) investment between the Current Policies Scenario (CPS) and the NZE Scenario between 2026 and 2050.Under current oil demand levels, which represent Alberta government and energy industry expectations, the Alberta oil sands sector investment is estimated at $466 USD billion. However, at the NZE Scenario oil demand levels, the Alberta oil sands sector investment is $18.7 billion. Premier Danielle Smith has been enthusiastically pitching her Alberta net zero agenda since July 2022, reaffirming it in the 2023 Alberta climate change plan, talking about it extensively in Ottawa with MPs, and officially signing on to it, along with the Carney federal Liberals, as the headline item of the Canada-Alberta MOU. The Alberta government claims that the NZE MOU will result in hundreds of billions of new investment in the Alberta and Canadian economies. However, the Alberta government refuses to release a comprehensive economic and financial risk assessment of the impact of Carney-Smith NZE. A recent request for information revealed nearly 30,000 pages in responsive records, but very little has even been released. So, what information is the Smith government hiding from Albertans?.We can be certain that the oil sands industry is doing its own due diligence before making any long-term investment decisions, such as agreeing to major increases in Alberta carbon taxes, investing in the Pathways CCS project, and participating in the West Coast BC pipeline project. Our investment risk assessment of the Alberta oil sands sector is based on a comparison of two scenarios, a Current Policies Scenario (CPS) and a Net Zero Emissions (NZE) Scenario. For the oil sands sector, the difference between the scenarios leads to an estimate of investment at risk.The Current Policies Scenario (CPS) considers a snapshot of current policies and regulations and offers a cautious perspective on the speed at which new energy technologies can be deployed and integrated into the energy system. Oil demand rises to 113 million barrels per day (mbpd) by 2050. The NZE Scenario (NZE) sees efforts to meet the Paris Agreement goal of limiting global warming to below 2 degrees and then pursuing efforts to limit global warming to 1.5 degrees by 2050 through net zero greenhouse gas (GHG) emissions. Oil demand peaks at 101.6 mbpd in 2025 and then falls to 21.7 mbpd by 2050.The $450 billion risk to Alberta oil sands investment under Carney-Smith NZE could crater the entire Alberta economy. This is what happens when governments make public policy decisions based on political talking points, rather than relying on robust risk assessment. Carney-Smith NZE needs to be put to a 2026 fall provincial referendum so Albertans can decide whether this is a course worth pursuing. I am very confident that, when presented with full impact analysis information, Albertans will tell the Smith government to scrap its commitment to NZE. Lennie Kaplan was 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.
