This open letter is updated and re-released from March 2024.
The Honourable Steven Guilbeault P.C., M.P.
Minister of Environment and Climate Change
RE: Open Letter: Calgary Chamber calls on government to withdraw the oil and gas emissions cap
Dear Minister Guilbeault,
On behalf of Calgary’s business community, the Calgary Chamber of Commerce urges the federal government to discontinue its work on an Oil and Gas Sector Greenhouse Gas Emissions Cap, given the profound consequences it would have on Canada’s economic prosperity. This is particularly concerning, given the likelihood of tariffs being imposed on goods being imported into the United States from Canada, which could affect our economy by as much as $45 billion.
The Calgary Chamber and its members are committed to reducing emissions – recognizing the significant challenge climate change poses to our planet and economy. However, we know a sector-specific cap on emissions is neither an effective nor efficient tool to address this challenge. Rather than support investment, the emissions cap would create uncertainty, unfavourable economic conditions and a punitive regulatory environment, all of which would strand investment and innovation in decarbonization projects. Furthermore, a study conducted by the Conference Board of Canada showed that the cap would require a decrease in production of 1 million barrels of oil equivalent per day, which translates into a $28 billion hit to our economy, the loss of approximately 150,000 jobs and a drop in both economic growth and productivity. Canada cannot afford this.
In the absence of the proposed emissions cap, we are seeing momentum, with the desire to decarbonize creating a period of unprecedented collaboration. Emissions from conventional oil and gas production have fallen by 24 per cent from 2012 through 2021, and oil sands producers have continued to reduce the emissions intensity per barrel, achieving a 23 per cent reduction since 2009. Industrial carbon pricing – coupled with strategic incentives – such as Alberta’s Technology Innovation and Emissions Reduction (TIER) Regulations, has proven to be both effective and efficient. This calls into question the merits of implementing a blunt instrument like an emissions cap – particularly given the potential to impact energy costs for both businesses and consumers, compromise opportunities for Indigenous economic reconciliation, and negatively affect continental energy security by limiting the domestic supply of oil and gas products, making us reliant on international supply to maintain energy security.
Moreover, with a new administration in the U.S. we can expect continental energy security to be a top consideration in international trade and negotiations with the United States. Canada remains the single largest foreign supplier of energy to the U.S. – through 2022 Canada exported more than $166.2 billion worth of energy products to the United States. Any decline in Canada’s ability to provide secure, clean and safe energy products to the U.S. could have a serious impact on our bi-lateral trading relationship, which in turn could result in a consequential impact to affordability and the economy in Canada.
The added regulatory burden, compliance costs and loss of production associated with the implementation of an emissions cap would increase both the price to produce and consume energy. This would come at a time when businesses and households are already struggling with rising costs – both nationally and internationally. Higher energy costs have a significant impact across sectors. For example, natural gas accounts for approximately 80 per cent of the cost to produce fertilizer. Raising these input costs would limit our energy, transportation, and agricultural industries’ competitiveness, while also increasing the cost of essential goods for Canadians, including food, heating and transportation. We must ensure that Canadians have continued access to affordable, sustainably sourced energy as we move forward with decarbonization policies.
The emissions cap would also have a direct impact on Indigenous communities in Canada. Currently, 7.4 per cent of the energy sector’s workforce identifies as Indigenous, more than twice the national average. In its proposed state, the emissions cap would lead to a drop in production, and consequently a decline in employment opportunities currently available to Indigenous peoples. The emissions cap also inhibits Indigenous communities’ ability to participate in the energy industry at a time when the industry is actively investing in partnership opportunities with communities. Equity partnerships have already been struck between communities and industry; should the emissions cap render these projects uneconomic, the opportunities for economic reconciliation would be greatly reduced.
Energy security is of growing concern globally. By imposing a sector-specific cap-and-trade policy, the government has proposed a system that by its very nature, limits production. This system would undermine the ability of energy-producing provinces to regulate and develop their own resources – directly inhibiting the ability of Canadian producers to safeguard national and continental energy security. For example, the majority of natural gas used to heat homes in Eastern Canada is supplied by Western Canada, as is the oil used in refineries to produce gasoline. Shortages of either commodity will raise prices and create instability in the market.
Finally, an emissions cap would compromise the valuation of the Trans Mountain Pipeline (TMX), as the government looks to sell the asset. If there is a risk that TMX might not be able to rely on a steady and predictable flow of oil from the oil sands production, it will result in a lower valuation by investors and a lower price received when the asset is sold.
Ultimately, the emissions cap is based on flawed economic, social, and environmental policy. It sets us up to miss targets – not meet them, running counter to actual emissions reduction. Considering these facts, we call on the government to:
- Withdraw the proposed emissions cap to allow the broad-based commercial carbon pricing and the provincial equivalents to effectively reduce emissions.
- Urge the government to advance and bolster further investment in decarbonization technologies, including Carbon Capture, Utilization and Storage through Investment Tax Credits and the Canada Growth Fund to support the development of Carbon Contracts for Difference.
- Engage in further consultation with all sectors of the Canadian economy to understand the social, financial, and regulatory impacts of the proposed emissions cap and other legislation such as the Clean Electricity Regulations, with the goal of minimizing unintended consequences, maintaining economic stability, and allowing the Canadian energy industry to capitalize on decarbonizing the economy in support Canada’s long-term prosperity.
Signatories
Deborah Yedlin, President & CEO
Calgary Chamber of Commerce
Shauna Feth, President & CEO
Alberta Chambers of Commerce
Zinat H. Damji, President & CEO
Alliance Trust Company
Hejdi Carlsen, Senior Vice President, Corporate Affairs
AltaGas Ltd.
Rob Blackwell, COO
Aspen Properties
Greg Guatto, President & CEO
Aspen Properties
Scott Hutcheson, Executive Chair
Aspen Properties
Robert Broen, President & CEO
Athabasca Oil Corporation
Sarah Powell, Owner
Aura Medical Aesthetics
Kevin Krausert, CEO & Co-Founder
Avatar Innovations
Cristian Madariaga, President
Barn Burner Cafe Co.
Chris Carlsen, President & CEO
Birchcliff Energy
Lisa Genovese, President
BottomLine
Shannon Watt, President & CEO
Canadian Propane Association
Mark Scholz, President & CEO
Canadian Association of Energy Contractors
Lisa Baiton, President & CEO
Canadian Association of Petroleum Producers
Candace Laing, President & CEO
Canadian Chamber of Commerce
Scott Stauth, President
Canadian Natural Resources Limited
Jon McKenzie, President & CEO
Cenovus Energy Inc
Kurt Enders, CEO
Checker Cabs
Jennifer Ezekiel, Vice President ESG & Strategy
CDN Controls ULC
Doug Griffiths, President & CEO
Edmonton Chamber of Commerce
Colin Gruending, Executive Vice President and President, Liquids Pipelines
Enbridge Inc.
Gurpreet Lail, President & CEO
Enserva
Waseem Sinjakli, CEO
EPM
Megan Szanik, Owner
Espy Experience
Cord Spero, Board Chair
Grande Prairie Chamber of Commerce
High River Chamber of Commerce
James Jenkins, Real Estate Manager
Vipul Jasani, Managing Director
Jasani Global
Christy Elliot, SVP, Sustainability, External Affairs & General Counsel
Keyera Energy Corp
Pat Carlson, CEO
Kiwetinohk Energy
Arlin Friesen, Owner
Lazy Day Raft Rentals
Milena Radakovic, President
Nexus Exhibits
Brad Winsor, President
Nutters Everyday Naturals
Andrew Cattran, Director Low Carbon Strategy
NuVista Energy
Rob Kessler, CEO
O.N.E. Transport Group
Oliver Wells, Chief Financial Officer
O.N.E Operating Group
Sue Howe, Finance Manager
OneWest Events
Kendall Dilling, President
Pathways Alliance
Scott Burrows, President & CEO
Pembina Pipeline Corporation
Peter Wallis, President & CEO
Peter Wallis Consulting Limited
Bruce Borstmayer, Owner
Qualicase Ltd
Allen Gransch, President
Secure Energy
Craig Stenhouse, Founder
Shift Critical International
Grant Wilde, Board Chair
Spartan Controls
Michelle Scott-Roedel, President
Strategic Talent Solutions Inc
Rich Kruger, President & CEO
Suncor Energy
Jason Denney, President & CEO
Teine Energy
Scott Volk, Director, Emissions & Innovations
Tourmaline Oil
Jelle Braksma, President
Trust Management Services
Paul Valentine, President
Valentine Group of Dealerships
Nancy Borden
Vancouver Island Propane Services Ltd.
ABOUT THE CALGARY CHAMBER OF COMMERCE
The Calgary Chamber of Commerce exists to help businesses reach their potential. As the convenor and catalyst for a vibrant, inclusive and prosperous business community, the Chamber works to build strength and resilience among its members and position Calgary as a magnet for talent, diversification and opportunity. As an independent, non-profit, non-partisan organization founded in 1891, we build on our history to serve and advocate for businesses of all sizes, in all sectors across the city.
