{"id":781046,"date":"2026-07-05T03:41:13","date_gmt":"2026-07-05T03:41:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/781046\/"},"modified":"2026-07-05T03:41:13","modified_gmt":"2026-07-05T03:41:13","slug":"canadas-carbon-pricing-wipes-out-alberta-oilsands-edge-in-attracting-investment-dollars-for-new-pipeline-study","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/781046\/","title":{"rendered":"Canada\u2019s carbon pricing wipes out Alberta oilsands\u2019 edge in attracting investment dollars for new pipeline: Study"},"content":{"rendered":"

Canada\u2019s industrial carbon tax pushes the cost of producing a marginal barrel of oilsands crude to $75 USD (at $95\/tonne carbon tax)\u2014well above what new projects in Texas or New Mexico face\u2014stripping away the tax advantage Alberta needs to attract energy investment, according to a new Fraser Institute study<\/a> by Jack Mintz, president\u2019s fellow at the University of Calgary\u2019s School of Public Policy.<\/p>\n

The findings land as Ottawa and Alberta advance a one-million-barrel-per-day West Coast oil pipeline proposal<\/a> under their November 2025 memorandum of understanding (MOU) and May 2026 implementation agreement. So far, Pembina Pipeline Corp. is the only private partner<\/a> to sign on, taking a 10 percent stake during construction, and no oil producers have yet committed to shipping on the line.<\/p>\n

Mintz said the research began long before the current political moment.<\/p>\n

\u201cThis work was started about three, four years ago\u2014it was more of an academic interest,\u201d he said in a phone interview with The Hub. \u201cIt struck me that no one had really looked at carbon taxation and how it affects competitiveness.\u201d<\/p>\n

A tax advantage erased<\/p>\n

The study compares the marginal effective tax rate on costs (METC)\u2014the share taxes add to the cost of the last unit produced\u2014for oil, natural gas, and electricity in Alberta, Texas, and New Mexico. Marginal cost, Mintz argues, is what drives investor decisions on where to build.<\/p>\n

Without carbon policies, Alberta wins on most fronts. Taxes, royalties, and fuel levies add 14 percent to oilsands costs, below the 14.6 to 15.7 percent in New Mexico and Texas respectively. Only conventional oil, saddled with a 33.9 percent revenue-based royalty, is taxed more heavily in Alberta.<\/p>\n

Carbon pricing reverses the picture. At the $95-per-tonne carbon tax in 2025, the maximum METC on oilsands hits 48.8 percent\u2014roughly triple the U.S. states\u2014and climbs to 76.4 percent under the $170-per-tonne price originally planned for 2030. The projections calculated in the research were before the adjusted carbon pricing set by the Carney government, however Mintz did create separate calculations for the new scenario as well.<\/p>\n

\"\"\/<\/p>\n

\u201cAlberta would lose its tax advantages it had, both for oilsands and power in particular, as well as conventional crude,\u201d Mintz said. \u201cThe story is that carbon taxation does put Canada [at a] tax disadvantage.\u201d<\/p>\n

In dollar terms, the oilsands supply cost of $51 USD per barrel without taxes rises to $58 USD with corporate taxes and royalties, and to $75 USD under the full $95-per-tonne carbon tax\u2014unprofitable against a Western Canadian Select (WSC) price near $70 CAD.<\/p>\n

\"\"\/<\/p>\n

The electricity blind spot<\/p>\n

While public debate fixates on the oilsands, Mintz\u2019s numbers suggest the biggest hit lands on electric power. Alberta\u2019s maximum METC on power reaches 137 percent by 2030 under the original carbon price track\u2014up to 12 times the 12 percent in Texas\u2014while even the more lenient TIER-based rate reaches 47 percent.<\/p>\n

\"\"\/<\/p>\n

\u201cElectricity feeds right through the whole economy in terms of pricing and affects consumers, affects other businesses,\u201d Mintz said. \u201cThat\u2019s going to have a relatively damaging effect on the Alberta economy.\u201d<\/p>\n

CCUS: subsidized, but \u201cno carrot\u201d<\/p>\n

Carbon capture, utilization, and storage (CCUS) narrows the gap on paper. With CCUS, U.S. power taxes actually turn negative by 2030 at minus 6.4 percent, thanks to the Inflation Reduction Act production credits, while Alberta\u2019s maximum METC still sits at 85 percent.<\/p>\n

\"\"\/<\/p>\n

Canadian CCUS incentives\u2014a combined federal-provincial investment tax credit of roughly 62 percent plus carbon tax savings\u2014are generous. But companies still bear the residual cost, which more than offsets the tax gains at the margin.<\/p>\n

\u201cAs long as the companies have to pay something towards the cost of CCUS, it\u2019s going to be a loser to them\u2014extra cost on top,\u201d he said. \u201cIf you\u2019re looking from the company\u2019s point of view, you ask the question: what is the net present value of carbon capture, utilization, storage? Leaving aside the political aspects, the net cost is negative to the company.\u201d<\/p>\n

Asked whether CCUS amounts to the \u201ccarrot\u201d in Canada\u2019s carrot-and-stick approach, he was blunt: \u201cIt\u2019s not really a carrot.\u201d<\/p>\n

The MOU math<\/p>\n

The core modelling predates the MOU struck by Prime Minister Mark Carney and Premier Danielle Smith, so Mintz added a section adjusting for the May 2026 implementation agreement: the carbon price now rises to $140 CAD per tonne by 2040 instead of $170 by 2030, with a minimum credit price climbing from $60 in 2030 to $110 by 2040, alongside tighter allowances.<\/p>\n

By his calculations, the deal delays rather than removes the burden. In 2025 dollars, the carbon-policy changes add $3 USD per barrel to oilsands marginal costs by 2040, equivalent to $3.8 billion USD annually at 2025 production levels. They also add $3 USD per barrel for conventional oil, or $360 million USD annually. Under the report\u2019s TIER-based $140-per-tonne (CAD) scenario, wholesale electricity rises from $41 to $53 per MWh.<\/p>\n

\u201cWith respect to tax competitiveness, Alberta had a tax advantage, [and] that tax advantage will be effectively gone under carbon pricing, especially as we get closer to 2040,\u201d Mintz explained.<\/p>\n<\/p>\n

Will anyone commit to a new pipeline?<\/p>\n

That math shadows the pipeline push. With only Pembina at the table and financial details unsettled, Mintz said producers hold leverage, \u201cThe companies can really play hardball and say, \u2018Look, you\u2019ve got to do a bunch of stuff for us if we want to invest at all,\u2019\u201d Mintz told The Hub.<\/p>\n

\u201cThe big issue is, will there be incentive for companies to build more [oilsands] plants in order to fill up the pipe? It\u2019s one thing to build a pipeline. The question is whether you have enough oil to sell.\u201d<\/p>\n

Investors, he added, weigh opportunity cost: \u201cA company is going to be looking at investment. Do I invest in Alberta\u2026 or would it be better to invest in Guyana or in some other country where I don\u2019t have to go through all this?\u201d<\/p>\n

<\/p>\n

\"\"\/
\n <\/a><\/p>\n

Graeme Gordon<\/a><\/p>\n

\n Graeme\u00a0Gordon is\u00a0The Hub’s Senior Editor and Podcast Producer. He has worked as a journalist contributing to a variety of publications, including CBC,\u2026
\n Read more\n <\/p>\n

A Fraser Institute study reveals that Canada\u2019s carbon pricing has diminished Alberta\u2019s competitive edge in attracting investment for oilsands projects. The carbon tax raises production costs significantly, making Alberta less attractive compared to Texas and New Mexico. As Ottawa and Alberta push for a new West Coast oil pipeline, concerns arise about the lack of commitments from oil producers. The study highlights that carbon pricing disproportionately affects electricity costs and questions the viability of new investments in Alberta\u2019s oilsands amidst rising costs and competitive pressures from other regions.<\/p>\n","protected":false},"excerpt":{"rendered":"Canada\u2019s industrial carbon tax pushes the cost of producing a marginal barrel of oilsands crude to $75 USD…\n","protected":false},"author":2,"featured_media":781047,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[49,48,295,66],"class_list":["post-781046","post","type-post","status-publish","format-standard","has-post-thumbnail","category-environment","tag-ca","tag-canada","tag-environment","tag-science"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/781046","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=781046"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/781046\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/781047"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=781046"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=781046"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=781046"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}