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An Oil Production Phaseout Would Cost Canada $74 Billion

A hypothetical scenario in which Canada phases out its oil production would end up costing it some $74 billion (C$100 billion), with Alberta bearing the brunt of that blow, a new report has suggested.

Produced by a non-partisan think tank, the Public Policy Forum, the report looked at two scenarios for Canada achieving a net-zero status with regard to carbon emissions.

One of the scenarios envisaged energy policies that targeted the oil industry with stricter emission regulations but without resorting to a production cap or a phaseout. The think tank called that scenario the “aggressive decarbonization model”.

The other scenario, which the Public Policy Forum dubbed the “accelerated phaseout model”, involves a phaseout of oil production.

“Both pathways arrive at net zero but with unequal economic impacts along the way,” the authors reported.

Under the accelerated phaseout scenario, Canada’s economy would grow at a rate 0.1% slower than the growth rate under the aggressive decarbonization scenario.

“This apparently small difference compounds over time, leading to $100 billion excess lost GDP in 2050, a three percent contraction of the overall economy,” the think tank also said.

“This essentially amounts to a deep recession without a recovery ever materializing. The lost output carries forward each year in perpetuity.”

The bulk of those hypothetical losses would naturally fall to Alberta given its role in Canada’s oil production. Yet, as some commentators have noted, there are no plans for a phaseout of Canada’s oil production.

"There's no phase-out going on there. There's no phase-out of the oil and gas sector either. They're talking about an emissions cap, not a production cap. And it's disappointing to see that conflated in this report," one economics professor told CTV News.

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Indeed, there is no production cap on the table for now but the federal government of Canada has been squeezing the oil industry with reams of regulations aimed at making them reduce their emissions, which may at some point involve a production cut in the same way that Shell would have to cut its oil and gas output to achieve the emissions cut it was ordered to effect by court.

By Irina Slav for Oilprice.com

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  • Ian St. John on May 13 2023 said:
    Not only do they mislead by calculating the cost of ending fossil fuels instead of reducing emissions (the target) but they ignore the billions that it is costing Canada for wildfires, timber loss, and agricultural drought and the billions that would be gained by the investment in renewables which are CHEAPER than oil now.

    The S curve is about to enter the steep slope.
  • b vickers on May 13 2023 said:
    I have trouble understanding why you present a report on this which so dramatically underestimates the impacts and presents the wishes, not the evidence of policies which are so anti-economic and anti-commonsense. The left wing, unreasonable, dreamers are obviously in control.
  • Kay Uwe Boehm on May 12 2023 said:
    Future CANDU HTR with liquid ammonia as ND3 (N-15) instead D2O between tubes out of RBN cubic boron nitride isotopes B-11 & N-15 also for fuel cladding unriched UO2 baked inside BN withouz QuadTriso for 30 year fuel runtime because ot better moderation and less neutrons lost leading to as much breeding like fission controlable over ND3 pressure bubbles and i stead H2O as coolant in tubes lithium-7 from 180 to 1340°C without pressure and moderating like in molten salt HTR (LiF&BeF) for security one storey sand upon and MgO under etc.

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