A recent analysis indicates that the Carney government’s pipeline agreement might steer Canada away from its climate goals, despite an arrangement on carbon pricing.
The independent Canadian Climate Institute assessed how the new deal between Alberta and Ottawa would affect carbon emissions. In comparison to the emissions path prior to the agreement, their analysis revealed that Canada’s emissions would largely stay the same or could even increase.
“The emissions reductions we are getting out of the deal are not really significant,” said Dave Sawyer, the institute’s principal economist.
In May, both levels of government finalized an implementation agreement for a possible pipeline to the West Coast. The federal government committed to “reduce emissions, and build a stronger economy” while establishing a “stronger” carbon pricing system.
Neither Ottawa nor Alberta has shared any of their own emissions modeling to support those assertions.
Canada and Alberta agreed on an effective carbon price of $130 per tonne by 2040 that will apply nationwide. The new deal postpones and diminishes the planned price increase, which was originally set to reach $170 per tonne by 2030.
A report accompanying the analysis found that carbon pollution levels would remain unchanged “in the best case” or rise in the “worst” case scenario.
Any reductions realized may not be enough to counterbalance a new pipeline that would generate an output of 1.4 million barrels of oil daily and “ultimately” maintain emissions on a “high trajectory through the middle of the century,” according to the report.
Alberta makes up nearly 40 percent of Canada’s total greenhouse gas pollution due to its high-emission oil and gas sector.
The province has imposed a price on carbon emissions for large emitters through its own industrial carbon pricing system for years. This system, known formally as Technology Innovation and Emissions Reduction Regulation or TIER, created a market for carbon credits.
WATCH | More about the proposed West Coast pipeline:
Alberta considering 3 pipeline routes through northern B. C.
Documents obtained by reveal that Alberta’s government has been evaluating three potential pipeline routes through northern B. C. for a significant oil export pipeline project. These documents were presented to local community leaders during private consultations regarding this proposal in spring.
Facilities that lowered their emissions earned carbon credits they could sell to competitors needing them. However, modifications made to TIER resulted in an oversupply of low-priced credits trading at one point at $20 per tonne instead of aligning with today’s target price at $95.
The agreement concerning carbon pricing pledges implementation of a price floor for those credits; however, Sawyer stated that there’s skepticism around whether this pricing mechanism will function effectively.
“The assumption that emissions will be lower really hinges on the successful implementation of this price floor, which looks to be really complex and fundamentally a challenge to implement given what they have done to the market,” Sawyer mentioned.
Just two weeks after signing this new deal, it seems Alberta’s carbon market is going in reverse. According to Quantum Commodity Intelligence, prices for TIER carbon credits in Alberta dropped by 25 percent, from around $42.25 per tonne down to $31.50.
The uncertainty regarding how well that price floor will operate combined with weaker benchmark tightening and ongoing issues with credit oversupply led the institute to determine that Canada’s emissions might end up worse off following the Alberta-Canada pipeline deal.
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Alberta considering 3 pipeline routes through northern B. C.
Documents obtained by reveal that Alberta’s government has been evaluating three potential pipeline routes through northern B. C. for a significant oil export pipeline project. These documents were presented to local community leaders during private consultations regarding this proposal in spring.
Facilities that lowered their emissions earned carbon credits they could sell to competitors needing them. However, modifications made to TIER resulted in an oversupply of low-priced credits trading at one point at $20 per tonne instead of aligning with today’s target price at $95.
The agreement concerning carbon pricing pledges implementation of a price floor for those credits; however, Sawyer stated that there’s skepticism around whether this pricing mechanism will function effectively.
“The assumption that emissions will be lower really hinges on the successful implementation of this price floor, which looks to be really complex and fundamentally a challenge to implement given what they have done to the market,” Sawyer mentioned.
Just two weeks after signing this new deal, it seems Alberta’s carbon market is going in reverse. According to Quantum Commodity Intelligence, prices for TIER carbon credits in Alberta dropped by 25 percent, from around $42.25 per tonne down to $31.50.
The uncertainty regarding how well that price floor will operate combined with weaker benchmark tightening and ongoing issues with credit oversupply led the institute to determine that Canada’s emissions might end up worse off following the Alberta-Canada pipeline deal.Source link
