![\"Text](\"https:\/\/www.cbc.ca\/a\/assets\/texttospeech.svg\")
<\/p>\n<\/p>\n
Listen to this article<\/p>\n
Estimated 5 minutes<\/p>\n
The audio version of this article is generated by text-to-speech, a technology based on artificial intelligence.<\/p>\n
A historic oil pipeline deal between the federal and Alberta governments \u2014 set to be announced on Thursday<\/a> \u2014 could lead to more production in the oilsands, cementing Canada\u2019s position as one of the world\u2019s largest fossil fuel producers, while pushing its climate targets even further out of reach.<\/p>\n At the same time, the deal could help strengthen the crown jewel of Canada\u2019s climate plan: the industrial carbon pricing system, which is considered<\/a> by experts to be Canada\u2019s strongest tool to push companies to drive down their emissions, bring new efficiencies to the oilpatch and spur investment into expensive carbon capture projects.<\/p>\n \u201cIt has the potential to work. This could actually be a watershed moment for decarbonization,\u201d said Michael Bernstein, president of Clean Prosperity, a research non-profit that studies decarbonization policies that can grow the economy. <\/p>\n \u201cIndustrial carbon pricing is at the heart of a strong climate policy, and it can drive many tens of millions of tonnes of emissions reductions, but only if the design is really done carefully and properly.\u201d<\/p>\n Analysts<\/a> have been warning that the pricing system is not working as it should be in Alberta, hampering low-carbon investment.\u00a0<\/p>\n Like in other provinces<\/a>, industrial facilities in Alberta have to gradually bring down their emissions over time. The provincial government gives them sector- and facility-specific emissions standards; companies invest in technology to help meet them.\u00a0<\/p>\n Companies that outperform the standards get awarded carbon offsets, which they can sell to others. On the other hand, those that go over their limits have to pay a carbon price (currently $95 per megatonne of carbon) or buy those offsets from other companies.<\/p>\n The issue, analysts say, is that over the past few years, too many of those offsets have been circulating in Alberta. They’re now trading at<\/a> around $25 per megatonne of carbon.<\/p>\n Bernstein says a big reason companies spend millions of dollars on reducing emissions \u201cis actually to generate credits that they can then sell to other companies, and therefore earn revenue that helps them recover their investment in decarbonization.\u201d<\/p>\n If those offsets drop in price too much, there really isn’t a business case to invest in decarbonization, he said. The solution to that is something called a carbon contract for difference, he said, through which the government guarantees a minimum price for a carbon offset.<\/p>\n This would give companies “the confidence that if the market price is too low, well, the government will come in and make up the difference and compensate them,” he said.<\/p>\n A contract like this would also motivate both levels of government to make sure the carbon pricing system remains strong, and the value of the offsets is maintained, guaranteeing the system will survive even if the party in power changes.<\/p>\n Will a new oil pipeline lead to more emissions?<\/p>\n The deal being negotiated by Prime Minister Mark Carney and Alberta Premier Danielle Smith could include federal support for a new oil pipeline to the West Coast, allowing Canadian oil to be exported to new markets in Asia on tankers. (At the moment, almost all of it is exported to the U.S.)\u00a0<\/p>\n Alberta wants the pipeline to have a capacity of one million barrels of oil per day. Current production in the oilsands is around 4.7 million barrels a day.<\/p>\n WATCH | Pipeline deal getting close: Carney deal with Alberta’s Smith will support oil pipeline: sources<\/p>\n Apart from the carbon price, CBC News has reported it could include commitments on the Pathways carbon capture<\/a> project, a $16.5-billion project to capture and store away the carbon emitted by oilsands production.<\/p>\n![\"Statistics](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2025\/11\/1764152588_904_default.jpg\")
The Cenovus Christina Lake oilsands facility southeast of Fort McMurray, Alta. (Amber Bracken\/The Canadian Press)Why is it important to fix Alberta\u2019s carbon pricing system?<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2025\/11\/1764152588_836_default.jpg\")
<\/p>\n