Three-quarters of the workers in Canada’s oil and gas industry could lose their jobs due to the government’s green energy strategy, according to a new report, which calls for developing measures to secure workers’ job transition.
Published by TD Economics on Tuesday, the report estimates that 50-75 percent of the 600,000 workers in the oil and gas sector, or roughly 312,000-450,000 workers—mostly located in Alberta, Saskatchewan, and Newfoundland and Labrador—are at risk of displacement as a result of Canada’s commitment to cut carbon emissions.
In December 2020, Prime Minister Justin Trudeau announced Canada’s new climate plan, titled A Healthy Environment and a Healthy Economy, which aims to reduce up to 40 percent of carbon emissions by 2030 and reach net-zero by 2050.
These aggressive targets come at the expense of the carbon-intensive oil and gas sector. The report notes that the extraction and distribution of oil and gas account for over one quarter of Canada’s greenhouse gas emissions, yet oil and gas also account for two-thirds of Canada’s energy consumption.
Reducing carbon emissions comes in two steps, the first being “a fundamental shift towards electrification, renewable electricity and clean fuels,” and the second the reduction of emission intensity in the oil and gas sector through new technology.
The report says even under the net-zero scenario, the demand for fossil fuels will not disappear completely, but the industry’s viability will be determined by its ability to regulate all forms of emissions.
Under the net-zero scenario, demand for oil and gas would drop by half in North America, followed by a sharp decline in production, which would directly or indirectly lead to the displacement of thousands of workers.
Past experience in the manufacturing sectors in both the United States and Canada offers a precautionary tale. In the 1990s through the early 2000s, automation and skill-biased technological changes slashed manual, routine jobs, causing widespread displacement among middle-skilled, middle-income workers.
The TD report warns of the danger in assuming that displaced workers from the oil and gas sectors would be fully accommodated into the green energy industry. First, skill-biased transition obstacles also exist between the oil and gas sectors and the clean energy industry. Geographical backdrop for green energy jobs should also be taken into account during workers’ transition; unlike fossil fuels, the extraction of renewable energy is not necessarily bound by the location of the resources’ natural deposits.
The report suggests the federal and provincial governments incorporate three elements into the transition policy framework. First is work with industry and training service providers to identify the skills needed in the clean energy sector, to redesign a new retraining framework for those who would bear the impacts of the transition.
The governments should also focus on clean energy infrastructure and development for the same affected communities, and also provide broad-based income support programs to partially offset income losses due to displacement.
“History has shown that natural unintended dynamics can press on inequality and underemployment if market forces are left unchecked,” the report stated. “Efforts and resources on the clean energy transition should be matched by efforts and resources to transition workers displaced in the process.”