Take it from a Quebecker—the oil and gas emissions cap is a self-defeating policy

When federal Environment Minister Steven Guilbeault tabled his first draft emissions cap specific to the oil and gas sector in early November, he was hailed by one and all as the magic-bullet solution to our climate change woes. Prime Minister Justin Trudeau was so impressed that he immediately stepped down and handed Guilbeault the keys to the kingdom.

I’m kidding, of course. In reality, the announcement ticked some people off quite a bit. For instance, Alberta Premier Danielle Smith accused the federal government of pretending to work collaboratively with the energy-producing province, only to come out with “exactly the same policy that [it] put forward a year ago with no changes whatsoever.” Smith said her government was considering “every legal option” in its arsenal, and has since announced several measures to fight back against the cap.

It is indeed hard to escape the conclusion that the federal government is playing politics, pure and simple, and that this emissions cap has nothing whatsoever to do with fighting climate change.

First off, Canada already has a broad-based carbon pricing mechanism. Why does the federal government need to double down and target a specific industry if the goal is just to reduce total emissions? After all, a ton of greenhouse gas is a ton of greenhouse gas, regardless of which industry emits it.

I was under the impression that the whole point of a carbon pricing scheme was to let market forces determine the best place to get those reductions. After all, if it’s cheaper to lower emissions over here, who is Guilbeault to step in and declare from on high, “Nay, thou shalt reduce emissions over there, and in this manner!”

Then there’s the fact that curbing oil and gas production in Canada—which Smith and others warn will happen, despite assurances to the contrary from the federal government—will do exactly nothing to reduce global emissions. That’s because the global demand for hydrocarbons will be unaffected by the Canadian decree.

This means that every barrel of oil or cubic meter of gas left in the ground here will be taken out of the ground somewhere else. Our emissions might go down, but some other countries’ will go up. In fact, if that other country’s environmental standards are less stringent than our own, its increased emissions may more than offset our local reductions, in which case global emissions would actually go up!

Unfortunately, while this political ploy will not move the needle on saving the planet, it will have some very real negative economic consequences for Canadians.

It is hard to escape the conclusion that the federal government is playing politics, pure and simple, and that this emissions cap has nothing whatsoever to do with fighting climate change.

For one thing, it will cost many Canadians their jobs. A report published last March by consultancy firm Deloitte estimates that such a measure would cause the loss, or prevent the creation, of 112,900 jobs in the country by 2040.

And working in oil and gas is a good gig, too, as jobs in this sector are among the highest paid in the country. The average salary of workers in oil and gas extraction is $151,461 , almost 2.4 times the average Canadian salary.

Nor are industry workers the only ones who will suffer. The same Deloitte report estimates that by 2040, the new regulation would lower Canada’s GDP by 1 percent compared to its potential. That may not sound like much, but can we really afford a $34.5-billion drop in Canada’s economic potential?

The Business Council of Canada agreed, in a public statement, that imposing an oil and gas emissions cap will make Canadians poorer , and considers it particularly bad policy given that Canada’s economy is currently stalling. The association also believes it “sends the wrong signal to our most important trading partner” and that it would “restrict cross-border energy trade and harm our shared economic and security interests.”

Bill Morneau, the finance minister for the first five years of Trudeau’s mandate, has also publicly criticized the measure in recent weeks. He suggested that the government re-evaluate the timing of the oil and gas sector emissions cap in order to better align with the United States and its incoming president. He noted that a lot has changed in the world since Trump’s first term, and that “[e]nergy security is going to be critical.”

Now, none of this matters one whit if your main purpose is to stick it to the oil and gas sector, come what may. But if the goal is to govern responsibly, for the benefit of ordinary Canadians, then the oil and gas emissions cap has got to go.

Daniel Dufort is President and CEO of the MEI. The views reflected in this opinion piece are his own.