Opinion: What does Ottawa gain by killing the energy golden goose?

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A ton is a ton is a ton.

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An oil sands mine at Fort McMurray, an automobile factory in Oshawa, or a private jet manufacturer in Montreal produces a tonne of CO.2 What is released into the atmosphere has exactly the same effect on the climate.

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Still, if Federal Environment Minister Stephen Guilbeau’s latest plans go forward, the first of these will be subject to tough new federal legislation, while the latter two will remain untouched.

That’s because Ottawa announced plans in July. cap Greenhouse gas emissions, especially from oil and gas production, will be 40% lower by 2030 than in 2005.

I won’t go into the calculations, but given the expected increase in global demand, what is required of the energy industry is roughly 47% reduction over the next seven years.

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To achieve this, the industry basically has two options.

You can quickly find ways to cut your emissions per barrel by almost half.

Or it could cut production almost in half, along with jobs, government revenues, etc.

The good news is that energy producers have proven very good at reducing emissions intensity. Once he produced a barrel of oil from the Canadian oil sands, one third Greenhouse gases have decreased since 1990.

Producers are becoming greener and more efficient and will no doubt continue to invest resources in that direction.

Unfortunately, it is unlikely that we will achieve a greater decline in strength over the next seven years than over the last three decades. A more realistic assumption is that improvement will continue at the same rate as in the past. a 12% Reducing emissions per barrel by 2030 — that in itself is no small feat.

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Yet the industry still falls far short of what the bureaucrats and politicians working in Ottawa’s office towers are looking to achieve. In order to make up for the shortfall, production will have to be cut.

The impact on the Canadian economy is very real.Based on how much Ottawa thinks he thinks a barrel of oil will bring by 2030, directly $44.8 billion This single new law took a toll on our economy that year alone.

To be clear, this is not the only set of regulations that apply to this industry. It will be yet another layer added on top of the vast area of ​​Ottawa. clean fuel regulationsthis is carbon taxthis is methane emissions rules, and a flurry of other environmental regulations.

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The damage to our economy is clear, but the impact on our climate is not.

The Canadian oil industry is, first and foremost, an export-oriented industry.we fourth largest 39th largest oil producer in the world. population.

Our level of economic development, vast lands and cold winters mean we consume more energy per capita than in other countries, but we produce far more than we need here. increase.

So include the surroundings and export the rest. 80% Our oil to other countries around the world.

In such a global market, the main impact of reducing domestic production in Canada is exporting production elsewhere. Russia, for example, would have little concern about increasing oil production in response to Ottawa’s decision to scale back US production.

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it’s not alone. Iran, Venezuela and other producers with much laxer environmental regulations are likely to be happy to capture market share that domestic producers have been forced to give up as a result of Ottawa’s policies.

Therefore, Ottawa’s laws do not curb global demand, so there is a very real risk that any regulation enforcing a reduction in production here will lead to greater damage to the environment.

Essentially, by limiting emissions in the oil and gas sector, Ottawa risks killing its golden goose for nothing in return. It looks more like an ideological stubbornness than a policy decision based on it.

Olivier Rancourt is an economist at the Montreal Economic Institute.