A recent memorandum of understanding between Alberta and the federal government has sparked significant discussion about pipeline projects and carbon capture technology. However, a critical component of the deal—Alberta's commitment to achieve net-zero emissions by 2050—has received less scrutiny, despite potentially severe economic consequences for the province.
The Staggering Economic Toll of a Net-Zero Target
An independent analysis, utilizing data from a 2024 custom research project by Navius Research, projects massive financial losses if Alberta adheres to its net-zero pledge. Over the 25-year period from 2025 to 2050, the province could see a reduction in economic activity totaling $559 billion (in 2021 dollars). Provincial revenues are forecast to drop by a cumulative $140 billion.
The impact on Alberta's cornerstone industry would be particularly dramatic. The analysis suggests oilsands output could fall by 1.8 million barrels per day by 2050, effectively cutting projected business-as-usual production in half. This would result in a 56% decrease in oilsands royalty revenue and a 31% reduction in total oilsands GDP over the quarter-century.
Comparing Policy Scenarios: Rollback vs. Net-Zero
The study contrasts two potential futures. The first, a "rollback policy scenario," assumes all climate policies in place or planned at the end of the Trudeau government are reversed, except for an economy-wide carbon price rising to $170 per tonne by 2030. This scenario also retains federal and provincial investment tax credits and provincial climate regulations.
The second, more stringent "net-zero policy scenario," takes the rollback case and adds Alberta's specific mandate to hit net-zero emissions by 2050. Both scenarios assume provincial autonomy over climate policies, aligning with the Alberta government's preferred approach.
The comparison reveals stark differences. Beyond the huge GDP and revenue losses, cumulative oilsands investment would be 21% lower under the net-zero path. The author, Lennie Kaplan, who spent over two decades in Alberta's public service evaluating energy policy impacts, emphasizes these are "big numbers."
Potential for Even Greater Losses and a Call for Transparency
Worryingly, the analysis suggests these figures might be optimistic. They depend on the aggressive and cost-effective deployment of high-tech solutions like direct air capture (DAC). If more pessimistic technology costs for DAC are applied, the economic damage could nearly double.
In that case, Alberta's cumulative lost economic activity could approach $1 trillion—a six percent decline—and lost government revenues could hit $210 billion, a ten percent drop.
Kaplan expresses surprise that Premier Danielle Smith's government reinforced its 2050 net-zero commitment in the November 2025 MOU without providing a comprehensive public impact analysis. He argues the province's climate plan should focus on technology-driven policies, like carbon capture, that allow oil and gas production—and economic growth—to continue.
The analysis concludes with a firm recommendation: the Alberta government must release a detailed economic and fiscal review of its net-zero goal. Unless it can produce persuasive data showing a much lower impact, the province should abandon the 2050 net-zero mandate and set what the author calls "realistic and achievable" emission reduction targets instead.
