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A new analysis shows the Carney government’s pipeline deal could lead Canada further from its climate targets, even with an agreement on carbon pricing.
The independent Canadian Climate Institute modelled the impact of the new deal between Alberta and Ottawa on carbon pollution. Compared with the emissions trajectory before the deal was signed, the institute’s analysis found Canada’s emissions would remain largely unchanged and might even grow.
“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 signed an implementation agreement to build a potential pipeline to the West Coast. The federal government promised it would “reduce emissions, and build a stronger economy” and establish a “stronger” carbon pricing system.
Canada and Alberta agreed to an effective carbon price of $130 per tonne by 2040, which will apply across the country. The new deal weakens and delays the price increase, which was supposed to rise to $170 per tonne by 2030.
In a report accompanying the analysis, the Canadian Climate Institute found carbon pollution levels would be left unchanged “in the best case” or increase in the “worst” case.
Any reductions achieved may not be large enough to offset a new pipeline, which would add an output of 1.4 million barrels of oil per day and “ultimately” keep emissions on a “high trajectory through the middle of the century,” the report states.
Responding to the report, Keean Nembhard, a spokesperson for the minister of the environment, climate change and nature, said Thursday afternoon the federal government is “moving forward with an industrial carbon pricing agreement that works, not just on paper but in practice.”
Nembhard then noted the report does say that Alberta can lower its emissions through the agreement and it neglected to consider one of the Carney government’s new climate policies.
“The report also did not account for the implementation agreement building on the federal government’s commitment to double the electricity grid announced in the National Electricity Strategy,” Nembhard said.
The response from the Alberta government was more critical.
“[The] analysis is not a credible assessment of Alberta’s industrial carbon levy,” said Ryan Fournier, the press secretary for Alberta’s minister of the environment and protected areas.
“It is an advocacy piece that fails to properly acknowledge that Alberta is already achieving real emissions reductions while continuing to grow production, and it treats reduced Canadian energy production as a policy success. Alberta rejects that approach.”
Despite requests from CBC News, neither Ottawa nor Alberta has released any of their own emissions modelling that backs up their claims.
Alberta accounts for nearly 40 per cent of Canada’s total greenhouse gas pollution due to its high-emitting oil and gas sector.
The province for years has levied a price on the carbon emissions for large emitters through its own industrial carbon pricing system. The system, formally called the Technology Innovation and Emissions Reduction Regulation or TIER, created a carbon market.
WATCH | More about the proposed West Coast pipeline:
Alberta considering 3 pipeline routes through northern B.C.
Documents obtained by CBC News reveal the Alberta government has been considering three possible pipeline routes through northern B.C. for a new major oil export pipeline. The documents were shown to local community leaders during private consultations on the proposed project this spring.
Facilities that reduced their emissions earned carbon credits and could sell them to competitors that needed to buy them. But changes to TIER led to an oversupply of low-priced credits that traded at one point at $20 per tonne instead of where the target price currently sits at $95.
The agreement on carbon pricing commits to implementing a price floor for those credits, but Sawyer said the institute is not convinced that the price mechanism will actually work.
“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 said.
Two weeks after signing the new deal, Alberta’s carbon market seems to be heading in the wrong direction. Prices for TIER carbon credits in Alberta have fallen by 25 per cent, from around $42.25 per tonne to $31.50, according to Quantum Commodity Intelligence, a price reporting agency.
Uncertainty about how effective that price floor will function, plus weaker benchmark tightening and continued problems with an oversupply of credits, led the institute to conclude that Canada’s emissions would be left worse off after the Alberta-Canada pipeline deal.