Federal Emissions Cap Sparks Heated Debate Between Ottawa and Alberta
The Federal Parliamentary Budget Office (PBO) has released its impact assessment of the upcoming oil and gas emissions cap, calling it essential for Canada to meet its promised greenhouse gas (GHG) targets. The report stresses the need for the cap to align with Canada’s national climate goals, but the Alberta government is pushing back, calling the policy harmful to not only Canadians, but the national economy.
In a joint statement, Premier Danielle Smith and Environment Minister Rebecca Schulz criticized the cap, citing independent analyses and PBO data that project significant economic damage. They warned the cap would cut oil production by 5 per cent, eliminate 54,400 jobs, and reduce Canada’s GDP by $20 billion by 2032. They add this will all occur while global emissions continue to rise.
“This cap will hurt Canadians, damage our economy, and cost jobs,” said Smith. “The federal government has dismissed these concerns for years, but the PBO’s analysis confirms what we’ve been saying all along.”
The Alberta government also highlighted what it calls a contradiction in federal policy. While Ottawa promotes the energy sector’s importance in trade, particularly as a tool to use against the U.S. amid ongoing tariff tensions, it is simultaneously undermining the industry at home.
“You can’t claim to support energy trade while undercutting the sector with policies like this,” Schulz said. “It’s blatant hypocrisy at a time when Canadians are uniting to support a stronger energy sector.”
Alberta is urging the federal government to scrap the cap, calling it unconstitutional and economically damaging. Smith pointed to the province’s efforts to diversify its customer base and maximize the value of energy exports, but she argued the cap undermines those goals.
“This cap must be scrapped immediately for the good of the country,” she said. “It’s bad for the economy, bad for Canadians, and must be abandoned.”
The province is also calling on the next elected prime minister to reject the cap, framing it as an ideological move that threatens Canada’s economic independence.
“The evidence is clear,” Smith said. “We must grow and expand our energy sector to unite Canada and ensure a strong, independent economy. This cap is not the way forward.” The debate over the emissions cap highlights the growing tension between federal climate goals and provincial economic priorities, setting the stage for a prolonged political battle.
