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Large machinery can be seen at the Athabaska oil sands north of Fort McMurray, Alta., in 2010.Kevin Van Paassen/The Globe and Mail

Three-quarters of the Canadians employed in oil and gas could lose their jobs as the country pursues aggressive climate targets, according to a new report that warns governments must develop worker transition plans now to prevent disastrous consequences.

If they don’t, workers could face displacement similar to that of the U.S. and Canadian manufacturing sectors in the 1990s and early 2000s, when automation and technological changes led to a decline in manual jobs across the economy.

The report by TD Economics for release on Tuesday estimates that by 2050, up to 450,000 of Canada’s current 600,000 direct and indirect oil and gas jobs could become casualties of falling demand for fossil fuel as more countries and companies commit to net-zero greenhouse gas emissions.

“There’s a role for governments to act to ensure that these workers aren’t forgotten and left behind,” said Francis Fong, a managing director and senior economist with TD and a co-author of the report.

Fossil fuel demand does not disappear entirely in most net-zero forecasts, the report notes. But with the extraction and distribution of oil and gas accounting for more than a quarter of Canada’s greenhouse gas emissions, the sector is a prime target for emission-reduction efforts.

Mr. Fong said in an interview it’s dangerous to assume that displaced oil and gas workers will find new jobs in the clean-energy sector.

That’s because the skills needed in clean energy are likely to be different from those required in oil and gas. Also, green jobs are likely to be more geographically dispersed, because deriving energy from renewables is not necessarily tied to the location of natural deposits of fossil fuels.

Manufacturing employment: U.S. vs. Canada

Per cent of total employment

23%

21

19

17

15

13

11

Canada

9

U.S.

7

5

2020

1980

1984

1988

1992

1996

2000

2004

2008

2012

2016

the globe and mail, source: td economics

Manufacturing employment: U.S. vs. Canada

Per cent of total employment

23%

21

19

17

15

13

11

Canada

9

U.S.

7

5

2020

1980

1984

1988

1992

1996

2000

2004

2008

2012

2016

the globe and mail, source: td economics

Manufacturing employment: U.S. vs. Canada

Per cent of total employment

23%

21

19

17

15

13

11

Canada

9

U.S.

7

5

2020

1980

1984

1988

1992

1996

2000

2004

2008

2012

2016

the globe and mail, source: td economics

The report notes that a combination of structural employment decline and a mismatch of skills needed for workers to successfully transition evokes the manufacturing sector experience in Canada and the United States, “the economic consequences of which are still being felt today.” Technological change over that time led to a hollowing-out of the labour market as manual, routine jobs across the economy became automated, which in turn led to a decline in middle-skilled, middle-income jobs.

Mr. Fong acknowledged that some people will be able to pivot and find work in clean energy. But he said it’s impossible to predict how many, because “we don’t exactly know what form the clean-energy transition is going to take.”

On the opposite end of the spectrum are those he’s most worried about – the people whose communities lose their major employers as a consequence of the clean-energy transition, and join the permanent ranks of the unemployed or underemployed.

“We thought we would get through the 1990s, 2000s manufacturing transition pretty well, but that was a lot messier than we anticipated. I think this has the potential to be as messy too, if not messier,” he said.

Still, Mr. Fong is optimistic governments have learned from the employment devastation wrought when other sectors experienced dramatic shifts.

Mining, oil, and gas extraction

Per cent of employment by province

8%

2014

2020

7

6

5

4

3

2

1

0

Can.

NL

Marit.

Que.

Ont.

Man.

Sask.

Alta.

B.C.

the globe and mail, Source: td economics

Mining, oil, and gas extraction

Per cent of employment by province

8%

2014

2020

7

6

5

4

3

2

1

0

Can.

NL

Marit.

Que.

Ont.

Man.

Sask.

Alta.

B.C.

the globe and mail, Source: td economics

Mining, oil, and gas extraction

Per cent of employment by province

8%

2014

2020

7

6

5

4

3

2

1

0

Canada

NL

Maritimes

Que.

Ont.

Man.

Sask.

Alta.

B.C.

the globe and mail, Source: td economics

The report recommends that the federal and provincial governments work with industry to identify skills needed in the clean-energy sector and design a new retraining framework, focus clean-energy infrastructure and development in the communities that bear the brunt of the energy transition, and implement broad-based income supports to partly offset income losses due to displacement.

“If we can combine what we’re doing on the policy front with directed investments in clean fuels, it’s an enormous opportunity for Canada to really be a leader in all of this,” Mr. Fong said.

Federal Natural Resources Minister Seamus O’Regan said it’s essential to get the transition right.

“Combatting climate change requires people who know what they’re doing,” he said in a statement to The Globe and Mail. “The people who built our oil and gas sector are the same people who will lower emissions. The same people who will build renewable energy. Simple as that. We need them.”

Alberta Energy Minister Sonya Savage said global demand for oil and gas means the sector will employ Albertans well into the future, but added her government is also focused on growing emerging industries such as hydrogen and geothermal energy “which offer opportunities for our province to leverage the skills and experience of our energy sector workers in the diversification of our economy.”

Ms. Savage said in an e-mail the province is also “committed to expanding educational opportunities in skilled trades” and will soon release further details on its Alberta Jobs Now program to support unemployed Albertans.

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