Mr. Speaker, with regard to (a), yes, a thorough analysis of impacts has been conducted and can be found in the Canada Gazette, Part 1, Volume 158, Number 45: Oil and Gas Sector Greenhouse Gas Emissions Cap Regulations. Because oil prices are set internationally and natural gas prices are set continentally, the analysis suggests that cost pass-through to consumers would be minimal. The ability for firms to pass on costs to consumers is further detailed in the response to question (b).
With regard to (b), the department concluded in its analysis of the proposed Regulations that there is low risk of costs being passed through to fuel consumers. The price of crude oil and natural gas commodities are generally determined in global or continental markets. Given that oil prices are set in international markets, the ability of firms to pass on these compliance costs to consumers is limited. In some instances, prices can be influenced by regional dynamics, which could result in some ability for oil and gas producers to affect downstream prices.
With regard to (c), departmental modelling indicates that the proposed Regulations would have very minimal impact on import levels and would not result in any increases in imports. Imports of oil and gas are in fact estimated to fall over time under scenarios with and without the emissions cap in place. Between 2019 and the 2030-2032 period, oil and gas imports are estimated to decrease by 5.6% without the emissions cap in place, and by 5.4% with the emissions cap in place. The increase between these two scenarios corresponds to 0.2% more oil imports in the regulatory scenario (with the emissions cap in place) than the baseline (without the emissions cap) over the 2030-2032 period. The modelling conducted for this analysis does not estimate from which jurisdictions the imports would originate.
With regard to (d), as noted in the answer to question C, departmental modelling indicates that the proposed Regulations will not have a significant impact on imports, and that imports are expected to continue to decrease with the oil and gas emissions cap in place. Likewise, departmental modelling shows that production is expected to grow by 16% between 2019 and 2030 under a scenario with the oil and gas emissions cap in place, compared to 17% growth in a scenario without the emissions cap. These very small decreases in production could be offset by production elsewhere in the world that is either more or less carbon intensive.
With regard to (e), as noted above, the price of crude oil and natural gas commodities are generally determined in global or continental markets. As such, there is limited ability for the oil and gas sector to pass on costs to end-users including Canadian households and other sectors. The cost of the emissions cap on the above noted sectors is thus expected to be very limited.
With regard to (f), the proposed emissions cap is not yet in place and would not establish a restriction on emissions until 2030. The department estimates that labour expenditure in the oil and gas sector will continue to grow with the emissions cap in place. The analysis projects growth of 53% from 2019 to the 2030 to 2032 period with the proposed emissions cap in place, which is only slightly below the 55% growth expected without the emissions cap. This corresponds to labour expenditure being only 1.6% lower in the 2030 to 2032 period under the emissions cap than without it, and this does not account for increases in labour expenditures in other parts of the economy or from post-2032 activity driven by decarbonization investments and long-term competitiveness in a net-zero future.
With regard to (g), the proposed Regulations would cap greenhouse gas emissions, not production and they are designed to ensure predictable emissions reductions from the oil and gas sector while enabling increased production.
Although global demand for oil and gas is expected to decline as the global economy switches to cleaner fuels to address the urgent issue of climate change, global demand for oil and gas is expected to continue for the foreseeable future. In a low-carbon world, improvements in emissions intensity are expected to improve the sector’s competitiveness over time.