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Employment Impacts of Canada’s Emission Reduction Plan

This research examines the effect of the federal government’s Emission Reduction Plan (ERP) on Canada’s labour market, using The Conference Board of Canada’s Long-Term Forecasting Model and the Model of Occupations, Skills, and Technology to evaluate industry impacts and transitions as well as inefficiencies and supply and demand forces related to employment. In this report we use a scenario we previously modelled that examines the economic impact of a “realistic” deployment of the ERP. This scenario makes several assumptions that aim to paint a picture of what Canada’s net-zero transition could actually look like.

What are the projected consequences of the ERP for Canada’s long-term overall growth and for the labour market specifically? In the move toward a net-zero economy, will the necessary redirection of capital to emissions reduction be a significant drag on productive capacity, particularly in fossil fuel production and other extractive industries? How will job levels fare within the support businesses for these areas, and what are the implications for industry mix, consumer prices, immigration policy, and retraining efforts?

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Key insights

This research estimates that the Emission Reduction Plan (ERP), released by the federal government in March 2022, will slow Canada’s long-term growth and lower employment across Canada by 2.6 per cent in 2050, representing a loss of over 712,000 jobs versus our baseline forecast in that year.

The ERP’s negative impact on Canadian economic growth is driven by the redirection of capital from productive capacity toward emissions abatement (e.g., carbon capture, electrification) and a legal cap on upstream oil and gas sector emissions, curbing fossil fuel production that would otherwise occur.

Industries directly hit by the ERP include oil and gas extraction, for which employment could be 29,000 jobs lower than baseline by 2050.

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