PBO Emissions Cap Report is Flawed

The Parliamentary Budget Officer ( PBO ) report on the emissions cap is out and we outline it’s flaws below (we also have a podcast on it below). Right now in the U.S. decades of progress in minimizing corporate pollution is being undone. Ultra-rich corporations in the U.S. are being given free reign to pollute as much as they like. Canada can, and must, be different – not just for moral reasons but for practical and economic reasons. If we want to trade more with partners in Europe they are going to care about our climate progress.

Strong corporate climate policies, like the emissions cap can spur green innovation and can force companies to re-invest in innovation here in Canada, rather than elsewhere, creating greener local jobs in the process. A corporate emissions cap could also save thousands of Canadian lives, and billions in health costs, from ambient air pollution alone without factoring in climate benefits.

We are making progress and we must protect what we love. That was the central message wildfire, storm, and flooding impact survivors (pictured above) from across Canada brought to Canadian officials in Ottawa when they advocated for an emissions cap.

As of March 10th, 2025 according to polling by Leger:

• Most Canadians (65 per cent) agree that Canada should invest in renewable energy instead of fossil fuel developments.
• A majority of Canadians (62 per cent) agree that Canada should maintain its climate commitments independent of the United States administration’s decisions, including its withdrawal from the UN Paris Agreement on climate.
• More than two-thirds of Canadians (67 per cent) agree that the next Canadian government should make climate action and protecting nature a high priority.

Related: Read our full fact sheet on the emissions cap here.

But no matter what people’s views on oil and gas expansion – we can all support an emissions cap on Canada’s most polluting corporations. In fact oil and gas production can meet ‘historical highs‘ under an emissions cap according to the PBO (more on that below), but corporations would need to meet bare minimum emissions reductions on site in the process. Offshore oil operators would even be able to make money selling carbon credits under a cap to more polluting projects in the rest of the country.

Oil and gas corporations, while only 5% of Canada’s economy, are Canada’s most polluting sector causing around 30% of national emissions. Between 1990 and 2022, emissions from oil sands production grew by 467% and conventional oil production by 24% – since 2005 emissions overall increased 11%. Per-barrel emissions from oil sands also increased since 2018. Meanwhile, other sectors, and individual Canadians, cut their emissions. These corporations have failed repeatedly to carry out simple measures that would help them meet their own emissions reduction targets (let alone meeting the higher general Canadian emissions reduction target).

This week the Parliamentary Budget Officer released a report on the ‘costs’ of the emissions cap and oil and gas lobbyists have been quick to try an use cherry-picked findings from the report to attack the emissions cap.

The report itself is also not the first report on climate policy by the PBO to have been based on a problematic analysis. Faulty premises also exist in this PBO emissions cap report, which skew the results against the emissions cap, as pointed out by the Pembina Institute:

1. The PBO assumes that virtually no further action is taken to reduce non-methane emissions in the next few years by corporations, which does not match what oil and gas corporations have promised to do. Those corporations have also sought out, and received, large amounts of taxpayer funding to cut emissions. They are now being promised even more money – which is why we need to a cap to make sure they actually follow through on those promises.

As the National Observer writes: “Billions of taxpayer dollars have been tabled to help companies cut carbon pollution, using technology like carbon capture. But the PBO’s analysis assumes the industry will not take advantage of government incentives.”

2. “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” according to the CBC. That’s a huge problem because again the whole point of climate policy is to create the jobs of the future while preventing damaging pollution. And green job growth will more that offset any reduced job growth in oil and gas.

Think about it this way: this is as if someone had done a report on the costs to the economy of requiring seat belts in cars without accounting for any of the benefits of having seat belts in cars. Yeah the automotive industry does have to spend more to put seat belts in, but nobody denies it’s a good thing in terms of lives saved and reduced healthcare costs.

Another analogy might be a historical study of diminishing job growth in the horse-drawn carriage industry, due to the rise of cars, without factoring in the increased job growth in car production.

And that leads to some final big takeaways:

1. Firstly, the emissions cap will not see anyone fired from the oil and gas industry but it will grow green jobs in a world where oil demand is set to peak this decade. Even the PBO’s faulty report only says less jobs would be created in the oil and gas sector under an extreme scenario of oil and gas growth, not that people would lose jobs. That scenerio simply will never happen. There will be no massive GDP hit from the cap either for the same reason that demand is set to peak.

2. The emissions cap is exactly the sort of policy Canada needs if we want to encourage local investment in Canada and differentiate ourselves from the U.S. Unlike in the U.S., in Canada the biggest polluters should pull the same weight as the rest of us. We need to grow a green economy now before it is too late.

3. Even under the flawed assumptions of the PBO report, the resulting findings show one thing: Oil and gas advocate’s claims that the emissions cap would cut Canada’s current oil and gas production, or prevent growth, are false. Whether or not you agree with expansion, that’s an important factual point.

One of things that differentiates Canada and the U.S. is that we aim to hold big polluters responsible. We may not agree on how to do that at times, but that central call for climate responsibility is a core part to what has defined Canada as country, and we have made progress even if oil and gas corporations have held us back. Let’s not lose that progress.

Experience shows oil and gas lobbyists don’t care about you and don’t care about Canada – they sadly only appear to care about profits for the very few.

The Environment in Canada Podcast, Parliamentary Budget Officer ( PBO ) Episode

On why the Parliamentary Budget Officer ( PBO ) Report on the Emissions Cap Misses the Mark… You can also listen to this episode on The Harbinger Media Network, Spotify, Apple Podcasts, iHeartRadio, the Community Energy Showcase, or YouTube.