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Canadian Prime Minister Mark Carney said his government is negotiating an agreement with Alberta that “creates necessary conditions” for the future construction of a new oil pipeline to Canada’s west coast.
A project that allows western Canada to ship crude via tanker to overseas markets is one of the main requests of Alberta Premier Danielle Smith and many of the citizens of her province. But while Carney and Smith are expected to shake hands on a deal on Thursday, the prime minister made clear there’s a lot more work to do before any new pipeline can proceed.
“We believe the government of British Columbia has to agree,” Carney said, speaking in Parliament. “We believe that First Nations right-holders in this country have to agree.” So far, the government of B.C. is firmly opposed to the idea and so are some Indigenous groups in that province.
Carney’s government has also insisted on another major condition during negotiations with Alberta: fixing the industrial carbon pricing market. The document will commit both the federal and provincial governments to creating a more stable and predictable industrial carbon price, according to people familiar with the discussions.
The federal government’s view is that a higher price on carbon is necessary to drive businesses to invest in technology that reduces emissions, the people said.
Alberta has had an industrial carbon market for years. But it’s broken.
The price of credits and offsets in Alberta’s carbon market, known as the TIER system, has collapsed to about $18 per metric tonne, said Albert Ho, manager of the TIER business line at Carbon Assessors, a price tracker. That’s about a fifth of the effective carbon price of $95 a tonne.
The result is that there’s little incentive for companies to pay up for green technology, because it doesn’t generate enough revenue.
A higher industrial carbon price is key for Carney because he has watered down, eliminated or suggested he would scrap many of the environmental policies of his predecessor, Justin Trudeau — including a consumer carbon tax and a cap on oil and gas emissions.
Pathways plus
The single largest pollution-curbing investment for Canada’s vast oil and gas sector is called Pathways, a mega-project that involves capturing carbon dioxide from oil sites and transporting it down a pipeline for injection underground near Cold Lake, near the center of Alberta’s eastern border with Saskatchewan.
Owned by major oil sands producers, it’s expected to cost $16.5 billion, according to the Alberta government.
Smith has said building both the pipeline and the Pathways project together is a “grand bargain.” The federal government has termed this quid pro quo as “Pathways Plus Pipeline,” and has ordered its Major Projects Office to examine the feasibility of getting it all built.
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