Achieving Canada's climate targets and the impacts on Alberta's oil sands industry

This research project uses an energy-economy model to: (1) assess Canada's current climate policies in the medium-term; (2) develop a sector-specific regulatory package stringent enough to meet long-term climate targets; and (3) assess the implications of domestic and international climate efforts on Alberta's oil sands industry. The modelling results predict that Canada will fail to meet its medium-term climate targets under current and proposed policies. Long-term targets can be met with a sector-specific regulatory approach as promised by the Government of Canada. Lastly, Alberta's oil sands industry will be impacted by cost increases from domestic climate regulation and from oil price declines due to international climate efforts. Two oil price scenarios are explored. Under the high oil price scenario, expansion of the industry is predicted to remain profitable. However, under the low oil price scenario, expansion is predicted to be unprofitable and existing oil sands operations may be driven out of the market over the next two decades.