A recent analysis suggests that the agreement between the Carney government and Alberta regarding pipelines could push Canada further away from its climate goals, despite a carbon pricing deal. The Canadian Climate Institute conducted a study on the impact of the partnership on carbon emissions. According to their findings, Canada’s emissions are projected to stay largely unchanged or potentially increase following the deal’s implementation.
Dave Sawyer, the institute’s principal economist, noted that the emission reductions expected from the agreement are not substantial. The federal and Alberta governments inked an implementation pact in May to potentially construct a pipeline to the West Coast. The federal government pledged to reduce emissions, boost the economy, and enhance the carbon pricing structure.
Under the agreement, Canada and Alberta agreed on a $130 per tonne carbon price by 2040, applicable nationwide. However, the deal weakens and delays the planned price hike to $170 per tonne by 2030. The Canadian Climate Institute’s accompanying report warned that carbon pollution levels could either remain stagnant at best or increase at worst.
The report further suggested that any emission reductions achieved may not offset the impact of a new pipeline, which is estimated to add 1.4 million barrels of oil daily and keep emissions on a high trajectory until the middle of the century. Responding to the analysis, a spokesperson for the federal environment minister emphasized the practical implementation of the industrial carbon pricing agreement.
The Alberta government criticized the analysis, calling it an advocacy piece that fails to acknowledge the province’s existing emissions reductions and production growth. They rejected the notion that reduced energy production signifies policy success. Despite requests, neither Ottawa nor Alberta has released their emissions models supporting their assertions.
Alberta, known for its high-emitting oil and gas sector, contributes nearly 40% of Canada’s total greenhouse gas emissions. The province has long imposed a carbon price on large emitters through its Technology Innovation and Emissions Reduction Regulation (TIER), creating a carbon market. However, changes to TIER led to an oversupply of low-priced carbon credits, impacting the market dynamics.
The implementation of a price floor for carbon credits is part of the carbon pricing agreement, but doubts linger about its effectiveness. Recent trends show a decline in TIER carbon credit prices in Alberta, raising concerns about the agreement’s impact on emissions. The Canadian Climate Institute concluded that uncertainties surrounding the price floor and market dynamics could leave Canada’s emissions in a worse state post the Alberta-Canada pipeline deal.