OTTAWA: The new energy agreement signed between Ottawa and the province of Alberta has been labeled a failure by the Canadian Climate Institute, a leading climate research organization. According to a new study released by the institute on Thursday, the agreement will do little to significantly reduce Canada’s carbon emissions.
The report highlights that the benefits from the Memorandum of Understanding (MOU) with Alberta are extremely limited. Furthermore, it warns that the deal fails to counter the potential rise in oil production within the province. The study points to flaws in the recent changes made to Alberta’s industrial carbon pricing system as the primary reason for this failure.
The implementation agreement regarding industrial carbon pricing was signed last month by Prime Minister Mark Carney and Alberta Premier Danielle Smith. The deal aims to bring Alberta’s actual carbon price to $130 per tonne by 2040. However, to achieve this, substantial concessions were made in the allowable carbon emission limits (stringency rates) for companies. The new framework is designed to be much simpler and more favorable to corporations compared to the strict standards previously set by the federal government.
Dave Sawyer, the principal economist at the Canadian Climate Institute, stated that the new system is insufficient to drive up prices in the carbon market. He warned that it would discourage large-scale investments needed to reduce emissions. Due to the exemptions granted to industries under the new pact, a massive oversupply of low-cost carbon credits is expected after 2030. The report cautions that instead of achieving real pollution reduction on the ground, this oversupply will likely lead to paper-only regulatory compliance.
While early details of the agreement initially caused carbon credit prices to jump from last year’s $17 to $40, the release of the full text saw prices slide back down to between $30 and $35. The report concludes that this new energy pact will not heavily impact Canada’s long-term emission reduction targets, as it fails to bring any meaningful improvement to an already weak system.
