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Posthaste: 'Seismic shift' coming to Canada's oil and gas industry could wipe out 450,000 jobs, economists warn

Good Morning! Think back to the 1990s and early 2000s when the rise in technology brought on a “hollowing out” of North America’s labour market as manual jobs became automated. The loss of “middle skilled, middle income” jobs was staggering.

The U.S. shed 6.2 million manufacturing jobs between 1998 and 2010; Canada, 625,000, the economic effects of which are still being felt today, says a new report by TD Economics. Canada’s energy sector saved it from the worst of this transition. While manufacturing jobs fell, jobs in the booming oil and gas sector soared 71% between 2001 and 2014.

“However, this is now about to change,” write TD chief economist Beata Caranci and senior economist Francis Fong. The economists say the jobs devastation of manufacturing’s decline in the 1990s is at risk of being repeated as Canada and the world move to a low-carbon economy. Ottawa’s commitment to reduce greenhouse gas emissions to net zero by 2050 will bring a “seismic shift” to Canada’s oil and gas industry.

They estimate that demand for oil and gas in North America will need to fall by half to reach the net zero target. About 600,000 people now work directly or indirectly in that sector in Canada, mainly in Alberta, Saskatchewan, Newfoundland and Labrador. By 2050, 50% to 75% of those workers are at risk of being displaced by the transition to clean energy, between 312,000 and 450,000 workers.

There is a belief that many of these workers will be absorbed into the clean energy sector, but the economists again cite manufacturing’s decline as a cautionary tale. The reason that was such a rocky transition was because technology created very different jobs in different areas of the country. For example, among the top states to suffer manufacturing job losses, only Michigan benefited from the job gains between 2010 and 2019.

The same goes for today. The economists stress that traditional oil and gas production will not disappear completely, but the development of new clean energies may not be dependant upon sitting on top of fossil fuel deposits. Ontario is already establishing itself in the green transition.

Home to more than 40% of Canada’s wind capacity and 98% of solar capacity, the province has “tremendous opportunity” to build on its renewables sector and potentially shift its energy supply away from Western Canada. In order to avoid the mistakes of the past, the economists have three recommendations for policy makers.

  • Focus clean energy infrastructure and development within the communities that will suffer the worst effects of the transition.
  • Identify the skills needed in the clean energy sector and work with industry to design training programs that complement the Canada Training Benefit.
  • Income supports that could partially offset losses for workers put out of a job, with specific programs for older workers, such as pension bridging grants.

The economists say the clean energy transition offers a huge opportunity “to redefine and reinvigorate Canada’s energy sector,” and companies here have the potential to become global leaders because of their experience with major projects. But history has shown that left to market forces such a transition can give rise to inequality and underemployment.

“Policymakers should not underestimate the structural shifts bearing down on oil and gas workers.

A more innovative approach to labour market shifts should be considered and prioritized in parallel to climate emission targets as a means to mitigate negative unintended economic and social consequences,” said Caranci and Fong.

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