Report

Impact Assessment of the Oil and Gas Emissions Cap

Mar 12, 2025

This report provides an assessment of the potential economic impact of the Government’s proposed regulations to cap greenhouse gas emissions from the oil and gas sector.

Highlights

In the absence of the Government’s proposed oil and gas emissions cap regulations, PBO’s baseline scenario indicates that upstream oil and gas emissions will exceed the legal upper bound (that is, the maximum allowable emissions) of 160 megatonnes (Mt) by 7.1 Mt annually, on average, over the first compliance period 2030 to 2032.
To achieve the legal upper bound, PBO estimates indicate that upstream oil and gas sector production will need to be reduced by 4.9 per cent over 2030 to 2032 relative to projected levels in the baseline scenario. That said, under the proposed regulations production is projected to be 11.1 per cent higher, on average, over 2030 to 2032 compared to current levels.
PBO estimates that the required reduction in upstream oil and gas sector production levels will lower real gross domestic product (GDP) in Canada by 0.39 per cent in 2032 and reduce nominal GDP by $20.5 billion. PBO estimates that achieving the legal upper bound will reduce economy-wide employment in Canada by 40,300 jobs and full-time equivalents by 54,400 in 2032.