Canadian governments stand to lose more than half of their revenue from oil and gas activities through 2040, and nearly nine-tenths of the taxes and royalties the industry says they will collect, as the global economy decarbonizes and shifts away from fossil fuel production, the UK-based Carbon Tracker Initiative concludes in an analysis released this week.
While the published report makes almost no reference to Canada or the United States, a side analysis supplied to The Energy Mix on behalf of Carbon Tracker shows governments’ fossil revenues eviscerated in both countries. By 2040, revenues fall 40% in the U.S. and 54% in Canada compared to the five-year averages from 2015 through 2019. Relative to the overheated projections and promises emanating from each country’s fossil lobby, they plummet 74% in the U.S. and 88% in Canada.
And yet, despite the widely-held belief that both economies are dependent on the fossil industry, governments’ oil and gas revenues between 2015 and 2019 amounted to just 0.3% of GDP in Canada and 0.2% in the U.S., said Carbon Tracker Junior Oil and Gas Analyst Axel Dalman. Those figures average out the deeper vulnerability of jurisdictions and regions like Alberta, Saskatchewan, northeastern British Columbia, and Newfoundland and Labrador in Canada, or Texas and North Dakota in the U.S. But they also show both countries with the financial resilience to help fossil-dependent regions along the road to a just, green transition.
Indeed, the overall numbers put Canada in 65th place on a list showing countries’ vulnerability to lost oil and gas revenues, while the U.S. came in 70th. The main Carbon Tracker report focuses in on the 40 most vulnerable petrostates in seven regions: Asia, Europe, the Middle East and North Africa (MENA), Africa, Latin America and the Caribbean, Oceania, and North America.
The wider analysis shows governments losing US$13 trillion in revenue over the next 20 years, including $9 trillion for the top 40 petrostates, with the majority of the drop “driven by lower prices, rather than lower volumes,” Carbon Tracker states. As a result, “populations that are heavily reliant on fossil fuel production face lower government revenues and job losses as the pace and inevitability of the energy transition increases.”
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