Economy
Ottawa’s emissions cap will impose massive costs with virtually no benefit
From the Fraser Institute
By Julio Mejía and Elmira Aliakbari
The resulting reduction in global GHG emissions would amount to a mere four-tenths of one per cent (i.e. 0.004 per cent) with virtually no impact on the climate or any detectable environmental, health or safety benefits.
Last year, when the Trudeau government said it would cap greenhouse gas emissions (GHG) from the oil and gas sector at 35 to 38 per cent below 2019 levels by 2030, it claimed the cap will not affect oil and gas production.
But a report by Deloitte, a leading audit and consulting firm, found that the cap (which would go into effect in 2026) will in fact curtail production, destroy jobs and cost the Canadian economy billions of dollars. Under Trudeau’s cap, Canada must curtail oil production by 626,000 barrels per day by 2030 or by approximately 10.0 per cent of the expected production—and curtail gas production by approximately 12.0 per cent.
According to the report’s estimates, Alberta will be hit hardest, with 3.6 per cent less investment, almost 70,000 fewer jobs, and a 4.5 per cent decrease in the province’s economic output (i.e. GDP) by 2040. Ontario will lose more than 15,000 jobs and $2.3 billion from its economy by 2040. And Quebec will lose more than 3,000 jobs and $0.4 billion from its economy during the same period.
Overall, the whole country will experience an economic loss equivalent to 1.0 per cent of GDP, translating into lower wages, the loss of nearly 113,000 jobs and a 1.3 per cent reduction in government tax revenues. Canada’s real GDP growth in 2023 was a paltry 1.1 per cent, so a 1 per cent reduction would be a significant economic loss.
Deloitte’s findings echo previous studies on the effects of Ottawa’s cap. According to a recent economic analysis by the Conference Board of Canada, the cap could reduce Canada’s GDP by up to $1 trillion between 2030 and 2040, eliminate up to 151,000 jobs by 2030, reduce federal government revenue by up to $151 billion between 2030 and 2040, and reduce Alberta government revenue by up to $127 billion over the same period.
Similarly, another recent study published by the Fraser Institute found that an emissions cap on the oil and gas sector would inevitably reduce production and exports, leading to at least $45 billion in lost economic activity in 2030 alone, accompanied by a substantial drop in government revenue.
Crucially, the huge economic cost to Canadians will come without any discernable environmental benefits. Even if Canada were to entirely shut down its oil and gas sector by 2030, thus eliminating all GHG emissions from the sector, the resulting reduction in global GHG emissions would amount to a mere four-tenths of one per cent (i.e. 0.004 per cent) with virtually no impact on the climate or any detectable environmental, health or safety benefits.
Given the sustained demand for fossil fuels, constraining oil and gas production and exports in Canada would merely shift production to other regions, potentially to countries with lower environmental and human rights standards such as Iran, Russia and Venezuela.
The Trudeau government’s proposed GHG cap will severely damage Canada’s economy for virtually no environmental benefit. The government should scrap the cap and prioritize the economic wellbeing of Canadians over policies that only bring pain with no gain.
Authors:
Economy
Ottawa’s proposed ‘electricity’ regulations may leave Canadians out in the cold
From the Fraser Institute
In case you haven’t heard, the Trudeau government has proposed a new set of “Clean Electricity Regulations” (CERs) to purportedly reduce the use of fossil fuels in generating electricity. Basically, the CERs would establish new standards for the generation of electricity, limiting the amount of greenhouse gases that can be emitted in the process, and would apply to any unit that uses fossil fuels (coal, natural gas, oil) to generate electricity.
The CERs would hit hardest provinces that rely on fossil fuels to generate electricity: Alberta (89 per cent fossil fuels), Saskatchewan (81 per cent), Nova Scotia (76 per cent) and New Brunswick (30 per cent). Not so much Ontario (7 per cent) and Quebec (1 per cent), which are blessed with vast hydro potential.
In theory, the government has been in “consultation” with electricity producers and the provinces that will be most impacted by the CERs, although some doubt the government’s sincerity.
For example, according to Francis Bradley, CEO of Electricity Canada, which advocates for electricity companies, there is “insufficient time to analyze and provide feedback that could meaningfully impact the regulatory design” adding that the “engagement process has failed to achieve its purpose.” And consequently, the current design of the CERS may impose “significant impairments to the reliability of the electricity system and severe affordability impacts in many parts of the country.”
This was not the first time folks observed a lack of meaningful consultation over the CERs. Earlier this year, Alberta Environment Minister Rebecca Schulz told CBC that an update to the CERs made “no meaningful corrections to the most destructive piece of Canadian electricity regulation in decades” and that CERs “would jeopardize reliability and affordability of power in the province.”
Simply put, with CERs the Trudeau government is gambling with high stakes—namely, the ability of Canadians to access reliable affordable electricity. Previous efforts at decarbonizing electrical systems in Ontario and around the world suggest that such efforts are relatively slow to develop, are expensive, and are often accompanied by periods of electrical system destabilization.
In Ontario, for example, while the provincial government removed coal-generation from its electricity generation from 2010 to 2016, Ontario’s residential electricity costs increased by 71 per cent, far outpacing the 34 per cent average growth in electricity prices across Canada at the time. In 2016, Toronto residents paid $60 more per month than the average Canadian for electricity. And between 2010 and 2016, large industrial users in Toronto and Ottawa experienced cost spikes of 53 per cent and 46 per cent, respectively, while the average increase in electric costs for the rest of Canada was only 14 per cent. Not encouraging stats, if you live in province targeted by CERs.
Reportedly, the Trudeau government plans to release a final version of the new CERs rules by the end of this year. Clearly, in light of the government’s failure to meaningfully consult with the electrical-generation sector and the provinces, the CERs should be put on hold to allow for longer and more sincere efforts to consult before these regulations go into effect and become too entrenched for reform by a future government.
Otherwise, Canadians may pay a steep price for Trudeau’s gamble.
Author:
Alberta
Alberta rail hub doubling in size to transport plastic from major new carbon-neutral plant
Haulage bridge at Cando Rail & Terminals’ Sturgeon Terminal in Alberta’s Industrial Heartland, near Edmonton. Photo courtesy Cando Rail & Terminals
From the Canadian Energy Centre
By Will Gibson
Cando Rail & Terminals to invest $200 million to support Dow’s Path2Zero petrochemical complex
A major rail hub in Alberta’s Industrial Heartland will double in size to support a new carbon-neutral plastic production facility, turning the terminal into the largest of its kind in the country.
Cando Rail & Terminals will invest $200 million at its Sturgeon Terminal after securing Dow Chemical as an anchor tenant for its expanded terminal, which will support the planned $8.9 billion Path2Zero petrochemical complex being built in the region northeast of Edmonton.
“Half of the terminal expansion will be dedicated to the Dow project and handle the products produced at the Path2Zero complex,” says Steve Bromley, Cando’s chief commercial officer.
By incorporating carbon capture and storage, the complex, which began construction this spring, is expected to be the world’s first to produce polyethylene with net zero scope 1 and 2 emissions.
The widely used plastic’s journey to global markets will begin by rail.
“Dow stores their polyethylene in covered railcars while waiting to sell it,” Bromley says.
“When buyers purchase it, we will build unit trains and those cars will go to the Port of Prince Rupert and eventually be shipped to their customers in Asia.”
A “unit train” is a single train where all the cars carry the same commodity to the same destination.
The expanded Cando terminal will have the capacity to prepare 12,000-foot unit trains – or trains that are more than three-and-a-half kilometers long.
Construction will start on the expansion in 2025 at a 320-acre site west of Cando’s existing terminal, which 20 industrial customers use to stage and store railcars as well as assemble unit trains.
Bromley, a former CP Rail executive who joined Cando in 2013, says the other half of the terminal’s capacity not used by the Dow facility will be sold to other major projects in the region.
The announcement is the latest in a series of investments for Cando to grow its operations in Alberta that will see the company spend more than $500 million by 2027.
The company, which is majority owned by the Alberta Investment Management Corporation previously spent $100 million to acquire a 1,700-railcar facility in Lethbridge along with $150 million to build its existing Sturgeon terminal.
“Alberta is important to us – we have 300 active employees in this province and handle 900,000 railcars annually here,” Bromley says.
“But we are looking for opportunities across North America, both in Canada and the United States as well.”
Cando released the news of the Sturgeon Terminal expansion at the Alberta Industrial Heartland Association’s annual conference on Sept. 19.
“This is an investment in critical infrastructure that underpins additional growth in the region,” says Mark Plamondon, the association’s executive director.
The announcement came as the association marked its 25th anniversary at the event, which Plamondon saw as fitting.
“Dow’s Path2Zero came to the region because of the competitive advantages gained by clustering heavy industry. Competitive advantages are built from infrastructure that’s already here, such as the Alberta Carbon Trunk Line, which transports and stores carbon dioxide for industry,” he says.
“Having that level of integration can turn inputs into one operation into outputs for another. Competitive advantages for one become advantages for others. Cando’s investment will attract others just as Dow’s Path2Zero was a pull for additional investment.”
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