HILL, ALIAKBARI: Trudeau’s emissions policies will impose huge costs

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The federal NDP recently ended its support for the consumer carbon tax citing its significant cost to everyday Canadians. But Canada’s costly climate change policies extend beyond the carbon tax. Indeed, the Trudeau government has introduced numerous policies in an attempt to reduce greenhouse gas (GHG) emissions, which impose major costs on Albertans.

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The consumer carbon tax is perhaps the most widely known GHG-reduction policy, which places a price on carbon (currently at $80 per tonne) and is set to rise to $170 per tonne by 2030. However, the Trudeau government has also imposed other regulations and mandates, including clean fuel regulations, electric vehicle mandates, the phase-out of coal-based electrical generation and building efficiency mandates.

The costs?

According to a recent study, these GHG policies will shrink the Alberta economy (as measured by GDP) by an estimated 6% by 2030. And employment in the province is expected to decline by 0.9%. To put these figures into perspective, a 6% contraction in 2024 would have shrunk the provincial economy by $27.7 billion, while a 0.9% decrease in employment would have meant a loss of approximately 22,837 jobs (based on data for August 2024).

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While these policies are expected to reduce GHG emissions, they fall short of meeting the government’s national GHG-reduction targets. As a result, further economic pain will be required if the federal government implements additional measures to further reduce GHG emissions.

These findings echo other studies that measure the effects of various climate change policies. According to a report by Deloitte, for instance, Trudeau’s policy to cap GHG emissions in the oil and gas sector (to 35%-38% below 2019 levels by 2030) will lead to less investment, nearly 70,000 fewer jobs, and a 4.5% decrease in economic output (i.e. GDP) among the provinces by 2040.

Unsurprisingly, Alberta is projected to be the hardest hit province.

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And here’s the kicker — these huge economic costs come with little to no actual environmental benefit. Even if Canada shut down its entire oil and gas sector by 2030, thus eliminating all GHG emissions from the sector, the resulting reduction would equal four-tenths of 1% of global emissions, which would have an undetectable impact on the climate. Meanwhile, as demand for fossil fuels continues to increase, constraining oil and gas production and exports in Canada merely shifts production to other countries, which have lower environmental and human rights standards such as Iran, Russia and Venezuela.

The Trudeau government’s climate change regulations are imposing huge costs on Albertans with little to no actual environmental benefit. While support for some of these policies — particularly the consumer carbon tax — is waning, federal policymakers should seriously rethink numerous other regulations.

Tegan Hill and Elmira Aliakbari are economists with the Fraser Institute.

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