Oil and gas production can meet 'historical highs' under emissions cap: PBO

Even with a national oil and gas emissions cap, Canada's fossil fuel sector could boost production by 11 per cent by 2032, according to an independent analysis.

The Parliamentary Budget Office (PBO) released a new analysis on Wednesday showing the federal government's oil and gas emissions cap would not affect the sector's current production levels — but does raise questions about whether it would limit future growth.

The report estimates that oilsands and natural gas production and processing in 2030-32 (the first compliance period under the cap) can achieve growth "well above current levels."

The cap would allow for a 15 per cent assumed increase in oilsands production and an almost 12 per cent increase for natural gas above 2022 levels, according to the PBO.

The report notes that would being production "close to historical highs."

It lands after the federal government released draft oil and gas cap regulations in November. Final regulations are expected to be released in the spring.

While Ottawa calls it a pollution cap, critics call it a production cap. Wednesday's PBO report clarifies that the draft policy does not cap production at current levels.

But forecasts from the Canada Energy Regulator show Canada's fossil fuel industry could have been on track to increase production by more than 15 per cent in that timeline.

The PBO estimates that Canada's projected real gross domestic product (GDP) in 2032 would fall by 0.39 per cent, and projected nominal GDP (which does not account for inflation) by $20.5 billion, if the emissions cap prevents the industry from achieving that level of growth.

The Conservatives linked prime minister-designate Mark Carney to that loss of potential oil and gas growth. Carney has suggested he would follow through with the government's climate policies, except the consumer carbon tax.

"Parliamentary budget officer's report calculates Carney's oil and gas production cap will kill 54,000 full-time Canadian jobs and $21 billion of yearly GDP," Conservative Leader Pierre Poilievre said on social media.

"How reckless. Right in the middle of a trade war with the U.S., Carney is attacking OUR jobs."

Like previous reports, the PBO does not factor in the cost of climate change and its impact on the GDP. It also does not consider the jobs that could result from decarbonizing the oil and gas sector and other sectors.

The report states the cap would prevent at least 7.1 million tonnes of emissions, equivalent to keeping 2,175,184 cars off the road.