KAPLAN: Scrap Alberta's net zero mandate — before it scraps the Oil Sands

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 the development of energy and environment policy.There are some recent suggestions that Prime Minister Mark Carney and Alberta Premier Danielle Smith will soon come to an agreement on a long-term path for industrial carbon prices in the province, as a means of achieving Alberta net zero emissions by 2050 (Alberta NZE 2050). In earlier research, I had estimated that industrial carbon prices in Alberta would have to rise to $371.00 per tonne, and likely higher, to meet Alberta NZE 2050. This could have serious economic and fiscal consequences for the province.Now, the Canada’s Energy Future 2026 report (CEF 2026), recently released by the Canada Energy Regulator (CER), appears to confirm my earlier findings of the negative impact that Alberta NZE 2050 could have on Alberta’s oil sands sector. According to data drawn from CEF 2026, Premier Danielle Smith’s government’s commitment to achieve NZE by 2050, as outlined in the headline of the Canada-Alberta MOU, could lead to the loss of at least 778,000 barrels per day in Alberta oil sands production from Current Measures or business-as-usual (BAU), by 2050. Current Measures under CEF 2026 include current climate change policies in place and moderate technological progress on emissions reduction technologies such as carbon capture, utilization, and storage (CCUS).And, under a prudent High Cost CCUS sensitivity case, developed by CEF 2026, oil sands production could be 1.65 million barrels per day, or 41% lower than under Current Measures.To reflect the uncertainty in technology costs, CER developed a High CCUS Cost sensitivity case. According to CEF 2026, “this sensitivity case starts with the same assumptions as Canada Net-Zero but uses CCUS costs for oil sands operations that are about double those used in Canada Net-Zero. Faced with higher CCUS costs, oil sands producers increasingly choose to shut down production instead of applying more costly CCUS or other, more expensive decarbonization options.”.Maintaining oil sands production under Alberta NZE 2050 depends on an aggressive uptake of higher-cost emission reduction technologies, i.e. 40 MT of CCUS in the oil sands sector by 2050, according to CEF 2026.The Smith government should be prudent in projecting the costs of abatement technologies, such as CCUS, when touting its net zero strategy. Remember that the Alberta government said that government policymakers should 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 investment supports, and competing access to limited capital.”Policy goals, such as Alberta NZE 2050, must be backed up with rigorous modelling and impact analysis. Unfortunately, the Alberta government has not provided sufficient public information to allow Albertans to fully assess the economic and fiscal impact of Alberta NZE 2050. Now with CEF 2026 weighing in, I reiterate that unless the Smith government can produce persuasive numbers showing that the negative impact on Alberta oil sands production will be much lower than the CER analysis suggests, they should scrap their NZE 2050 mandate and establish realistic and achievable emission reduction targets for Alberta.It is high time for the Alberta government to release the economic analysis it has conducted on the negative impacts of Alberta NZE 2050.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 the development of energy and environment policy. He also served as a consultant to the Office of the Auditor General during its 2018 audit, “Design of Systems to Manage the Climate Leadership Plan and Adaptation.” In 2019, he provided initial policy advice to the Alberta government leading to the development of the Technology Innovation and Emissions Reductions (TIER) regime.

KAPLAN: Scrap Alberta's net zero mandate — before it scraps the Oil Sands

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