CALGARY/TERRITORIES OF THE BLACKFOOT AND PEOPLES OF TREATIES 6 AND 7, HOME TO MÉTIS NATION OF ALBERTA, REGION III — A new report, Heads in the Sands: Understanding the social and economic risks of declining global demand for Alberta oil, explores the timing and severity of the impacts of a large-scale decline in oil sands production due to collapsing global demand for Canadian oil exports. The research warns that the stakes of an unmanaged decline are high, and there is a short runway for governments and communities to prepare.
Authored by Hadrian Mertins-Kirkwood, a senior researcher with the Canadian Centre for Policy Alternatives, and Matt Hulse, a lawyer at Ecojustice, the report finds the economic, social, and environmental costs of a market-driven oil sands decline are significant — and start as early as 2030.
The report is based on oil sands production forecasts from the Canada Energy Regulator, which found that global demand for oil will drop dramatically if the international community follows through on its climate change commitments, leading to a potential decline in oil sands production of 83 per cent by 2050. This decline will occur regardless of domestic efforts to reduce emissions or boost production. The report models the consequences of this potential decline in oil sands production in terms of jobs, public revenue, and environmental liabilities, finding:
- A decline in total revenues generated by the oil sands from more than $100 billion in 2023 to just $5 billion in 2050.
- A consequent collapse in public revenues collected from the oil sands through royalties and taxes from around $20 billion today to near-zero by mid-century.
- A drop in total employment connected to oil sands construction and production from roughly 100,000 workers today to around 5,000 by 2050.
- Stranded assets of nearly $70 billion from projects that shut down before paying off their debts.
- Unfunded environmental cleanup costs that could be as high as $130 billion.
On the positive side, the report finds that cleaning up the oil sands could create 15,000 new jobs, but these depend on Alberta ensuring that its reclamation security fund is properly funded.
The authors hope the new findings will equip governments and communities with key context about the nature, magnitude, and timing of impacts from a market-driven decline in oil sands production, so they can take necessary steps towards a just and equitable transition. Proactive transition plans that implement worker supports and encourage economic diversification are necessary at the provincial, regional, and community levels.
The authors and advocates for an equitable future for oil sands workers had the following to say:
Hadrian Mertins-Kirkwood, co-author and a senior researcher with the Canadian Centre for Policy Alternatives, said: “Canadian governments and the oil industry itself are banking on Canada being the last oil producer standing in a world that’s moving away from fossil fuels. But what if they’re wrong? We are not prepared for a scenario where the world stops buying Canadian oil. An unmanaged collapse of the sector would be devastating for an unconscionable number of workers and their communities.”
Matt Hulse, co-author and lawyer at Ecojustice, said: “We can’t control global oil markets, but we can plan for a future where the oil sands no longer provide the jobs and revenue they once did. Fortunately, we can see what’s coming and we have time to prepare. The federal and Alberta governments must support First Nations, municipalities, and other communities in the oil sands region to participate in a different future, one that puts the well-being of people and the environment first.”
Luisa Da Silva, Executive Director, Iron & Earth, shared: “Canada needs to ensure that those who built the energy systems of the past will have a sustainable future. Iron & Earth has been delivering community-driven climate solutions since 2016, at a time when over 100,000 oil and gas workers lost their jobs. Now is the time to manage the change, and ensure that workers and communities have a voice in their energy future, sustainable jobs, and sustainable communities to live in.”
Background
- In its 2023 Energy Futures Report, the Canada Energy Regulator (CER) forecasted that, if the global community takes the necessary steps to achieve its goal of net-zero emissions by 2050, oil sands production will fall 83 per cent between 2022 and 2050. This forecasted decline accounts for a high level of uptake of carbon capture technology by the oil sands industry to reduce emissions.
- Modelling by the CCPA shows that, in this CER scenario, new oil sands projects won’t get built, existing projects will begin shutting down in the 2030s, and only a handful of projects will remain operating by 2050.
- In the context of the broader Canadian economy, the loss of jobs and revenues presented here are stark but not existential. The same cannot be said for the communities in Alberta that are deeply invested in oil sands production.
- Find the full report here: https://policyalternatives.ca/heads-in-the-sands
About
The Canadian Centre for Policy Alternatives is an independent, non-partisan research institute concerned with issues of social, economic and environmental justice. Founded in 1980, the CCPA is one of Canada’s leading progressive voices in public policy debates.
Ecojustice uses the power of the law to defend nature, combat climate change and fight for a healthy environment. Its strategic, public interest lawsuits and advocacy lead to precedent-setting court decisions, law and policy that deliver lasting solutions to Canada’s most urgent environmental problems. As Canada’s largest environmental law charity, Ecojustice operates offices in Vancouver, Calgary, Toronto, Ottawa and Halifax.
