Cory Morgan: Unrealistic Energy Sector Emissions Caps Will Kill the Canadian Economy’s Golden Goose

An oilsands processing unit in Fort McMurray, Alta., in a file photo. (The Canadian Press/Jason Franson)

Commentary

Canada’s economy may manage to escape going into a recession despite economists predicting it would over the last few months. Higher-than-expected growth in the national GDP in the first quarter of 2023 has dampened speculation of an economic contraction. This has led to speculation the Bank of Canada will be raising interest rates again to try and curb inflation.

The economy is doing better than anticipated post-pandemic but it remains fragile. Rash moves by the government could still send it into a tailspin of unintended consequences.

While the federal government is patting itself on the back for the strong economy, it doesn’t like mentioning what has driven this economic growth. Mining, quarrying, and oil and gas were the main drivers of Canada’s economic growth, according to Statistics Canada. At the same time, manufacturing, accommodation and food services, and retail and wholesale trade all declined in the first quarter of 2023.

The industries shoring up Canada’s economy are all high emitters of greenhouse gasses and are targets under Canada’s unreasonably restrictive emissions cap. If federal policies on emissions don’t change, Canada will be stunting its only large industries managing to show strength in a tight world economy.

A recent report released by the Fraser Institute concluded that Canada’s emissions caps will cause heavy economic damage to the nation’s economy while offering little to no environmental benefits. In the words of the author of the report: “Inflicting such pain on Canada’s economy voluntarily would seem to fall into the category of shooting oneself in the foot.”

Inflation and a growing cost of living have been plaguing Canadians for the last few years. High energy costs drive the costs of every consumer product higher along with essential utilities for citizens. Having vast energy deposits in Western Canada helps offset the pressures of high world energy prices. Governments at every level take in billions in revenue from oil and gas development while domestic energy prices remain relatively low when compared to nations more reliant upon energy imports. Canada will lose that advantage soon if the emissions cap remains as it is.

Energy companies have made great strides in emission reduction with new production methods and carbon capture technologies. That still isn’t enough for a government obsessed with reining in emissions. The Net-Zero Emissions Accountability Act aggressively demands net-zero emissions by 2050. The act was followed by the 2030 Emissions Reduction Plan which targets oil and gas companies with the expectation of having them reduce emissions to 31 percent below 2005 levels by 2030. That is a ridiculous, punitive, and unachievable target being placed upon Canada’s oil and gas sector. While unachievable emissions targets are nothing new for the government, when they are enshrined in legislation against industries, they can be devastating.

Investment is being chilled and it's migrating to other countries. Energy is a global market and as Canada regulates oil and gas out of economic viability, other nations with less restrictive restrictions are increasing their output. In other words, we may be making the world's environment worse as we drive business to countries with fewer environmental restrictions, not to mention human rights practices.

While it's anticipated the world will be transitioning to electric vehicles in coming years, it's also anticipated that world demand for oil is going to rise by 17.6 million barrels per day by 2045. Canada won’t be able to expand production to meet that growing demand due to self-imposed emissions caps which will not impact the environment. International virtue signalling may make some government ministers feel good about themselves, but it won’t pay our bills. It's foolhardy to refuse to fill that world market need when we have the resources to do so.

Beyond creating fuels for energy generation and transportation, the oil and gas sector creates a plethora of essential and lucrative petrochemical products. Even if the entire world electrifies its energy sources, it will still need plastics, chemicals, and other oil byproducts. We can’t make cars from hemp, and windmills can’t pave roads. We are surrounded by petrochemical products, from our phones to our household plumbing. If we shut in our own sources of such materials, we will be importing them at inflated prices.

Canada’s ever-increasing carbon tax has spurred a lot of discussions because consumers can see and feel its effects upon them. The emissions caps being placed on Canadian energy producers are sliding under the radar of public discourse. Decision-makers need to set aside their ideologies and start looking at economic realities. If we chill our production of petrochemicals today with these unrealistic caps, we will all be paying a heavy price for it tomorrow.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.