Federal climate plan could trigger Alberta recession

Ottawa’s emissions cap unfairly targets Alberta while claiming to serve national climate goals

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Alberta could face a deep recession in 2030, driven not by global markets but by Ottawa’s climate agenda. A new analysis warns that federal plans to cap oil and gas emissions and cut greenhouse gases would hit Alberta harder than any other province, gutting jobs, income and government revenues.

According to recent analysis by the Conference Board of Canada, a respected non-partisan economic research group, the impact of these federal climate policies would be both severe and long-lasting. As the report states:

“Given the importance of the oil and gas sector to Alberta’s economy, the province will be disproportionately impacted by the policies in the ERP [Emissions Reduction Plan]. Alberta would experience a deep recession in 2030 and would subsequently experience slower economic growth compared to our Baseline forecast. As a result, Alberta’s GDP (11.0 per cent), employment (4.1 per cent), and government revenues (9.3 per cent) would all be lower than in our Baseline scenario in 2050. Also… incomes in Alberta would be 7.3 per cent, or $3,300 lower per person.”

These are not hypothetical figures. The modelling, presented to the Alberta government in January 2025, examined a range of scenarios, including different oil price assumptions and technology adoption paths. Regardless of the outlook, one conclusion stands out: Alberta would shoulder nearly 80 per cent of all Canadian oil and gas production cuts under the proposed emissions cap.

Oil and gas account for nearly one-third of Alberta’s GDP and a major share of its government revenues. With so much of the provincial economy dependent on energy production, the consequences of these federal mandates would be disproportionately severe.

This raises serious questions about fairness, federalism and the balance of power in Confederation. Why should one province absorb the lion’s share of the cost to satisfy national targets negotiated without its full consent?

This isn’t just poor policy: it’s deliberate and destructive.

Alberta Premier Danielle Smith’s government has recognized the threat and responded by forming the Alberta Next Committee and appointing a special negotiating team. Its efforts are aimed at securing a more balanced deal with Ottawa—an “Alberta Accord” that protects the province’s core economic interests while contributing to national climate goals through technology and innovation, not coercion.

Prime Minister Marc Carney has long promoted the idea of building a green economy, and his government appears poised to continue down that path. But real transitions require co-operation. A credible climate plan cannot be built by crippling one region to subsidize another.

Alberta is already leading in areas such as carbon capture, hydrogen and clean power generation. Yet those efforts risk being undercut by federal policies that punish energy producers simply for existing.

The memory of the National Energy Program looms large. Introduced by the first Trudeau government in the 1980s, it redirected energy revenues to Ottawa, drove investment out of Alberta and triggered one of the province’s worst economic downturns. The parallels today are hard to ignore: once again, a federal Liberal government is imposing top-down energy policy with little regard for the fallout in the West.

The situation also highlights a deeper issue—the steady erosion of provincial autonomy in economic decision-making. If federal policies can devastate one province’s economy in the name of national ambition, what does that say about the future of Canadian federalism?

The numbers are clear. The proposed federal emissions cap would gut Alberta’s economy, eliminate jobs and cripple public revenues. The Smith government must escalate its pushback and build broad provincial support to stop Ottawa from repeating the mistakes of the past.

Alberta cannot afford a second National Energy Program.

Lennie Kaplan is a former senior manager in the Fiscal and Economic Policy Division of Alberta’s Treasury Board and Finance Ministry, where, among other duties, he assessed the risks of government financial arrangements with private sector business ventures. He also served as a research consultant to the Auditor General of Alberta’s 2018 audit entitled APMC Management of Agreement to Process Bitumen at the Sturgeon Refinery.