Prime Minister Mark Carney is poised to announce a deal with Alberta Premier Danielle Smith that will postpone implementation of a $130-per-tonne industrial carbon price in Alberta from 2030 to 2040, according to multiple news outlets each citing multiple sources.
Under the carbon pricing regime established by the former government of Justin Trudeau, the industrial carbon price was to hit $170 per tonne by the end of this decade. That threshold is now off to sometime in the 2070s, the Toronto Star reports.
The news has climate and clean economy experts decrying yet another massive policy concession that will undercut federal climate goals and imperil jobs in the clean economy.
CBC says the PM is tentatively scheduled to travel to Alberta Friday for a joint announcement with Smith. as long as "two to three outstanding issues" can be ironed out by then.
News organizations confirmed the story just a day before Carney is expected to unveil a long-awaited national electricity strategy that will aim to double the country's grid capacity by 2050, CTV News reported Wednesday. The strategy was meant to be released weeks ago, but reports indicated it had been delayed until carbon pricing negotiations between Canada and Alberta concluded.
In the controversial Memorandum of Understanding that Carney and Smith signed in late November, suspension of federal Clean Electricity Regulations was made conditional on a new carbon pricing regime.
The MOU also committed the two governments to work out details of an industrial carbon pricing regime at $130 per tonne-already a step back from the Trudeau-era target-with the aim of creating certainty for investors. The new system was to operate through Alberta's Technology Innovation and Emissions Reduction (TIER) program. But days after signing the MOU, Smith locked in technical changes to TIER that brought the effective industrial carbon price down below $20 per tonne.
While the Star says it isn't immediately clear how changes to Alberta's carbon price will affect pricing in other provinces, past experience with federal carbon pricing strategy suggests that a carveout for one province can quickly translate into similar concessions elsewhere.
Canadian Climate Institute President Rick Smith told CBC the initial reports of the Canada-Alberta deal were "disappointing".
Related Story: Diluted Carbon Price Misses 'Reality of the World We're In', Could Impede Diversified Trade: Climate Institute
"Clearly 2040 is too late to achieve a $130-per-tonne effective carbon price, and given that the actual cost of this industrial carbon price for oil producers is pennies per barrel, about the cost of one Timbit per barrel, waiting a decade doesn't seem reasonable," he said.
CBC says the carbon pricing deal "clears the way for both governments tackling other aspects of the MOU," including a new West Coast pipeline, massive investment in new artificial intelligence data centres, new transmission lines across the western provinces, and a massive carbon capture and storage hub that was to be a condition of any new pipeline, but may also be postponed to 2040.
Fossil industry voices were pleased with the news, telling CBC it brought the country one step closer to a new bitumen pipeline to the coast. Former Alberta finance minister Doug Horner said the "significant" development would help bolster the case against the separatist referendum the province may be voting on this fall.
But climate and energy transition experts cast the deal as another stunning rollback that will drive up emissions, impede clean energy investment, and endanger jobs.
"A 2040 carbon pricing implementation timeline is essentially worthless," Adam Scott, executive director of Shift Action for Pension Wealth and Climate Health, wrote in an email. "Policy details aside, the oil and gas industry has long relied on lobbying for implementation delays as a core strategy to avoid the policy rubber hitting the road," and "any policy implementation delay beyond the current political cycle should be viewed as no policy implementation at all."
Scott added that "in exchange for a nearly worthless industrial carbon pricing regime-that the federal government appears unwilling to even enforce-a dismantling of Canada's entire federal regulatory system for environmental protection is taking shape." His list of more than a dozen greatest hits included scrapping the consumer carbon tax, delaying the industrial tax, delaying and weakening federal methane regulations, scrapping the Clean Electricity Regulations (CER) for Alberta as well as the federal cap on oil and gas emissions, and a host of exemptions from existing environmental regulations.
"Correct me if I'm wrong, but wasn't the whole idea of the MOU that Alberta would receive concessions in things like the CER and emissions cap in exchange for strengthening the industrial carbon price?" Dustin Carey, climate adaptation lead at the Green Municipal Fund, asked on LinkedIn.
Canada's Clean50 founder and executive director Gavin Pitchford said federal climate rollbacks are already undercutting the development of Canada's clean economy.
"Companies are reading the tea leaves and ceasing investment in energy efficiency projects that no longer produce the ROI they need on the timeline they need. They're cutting their sustainability departments and firing senior employees," he wrote in an open letter to Carney, and to 10 Members of Parliament and one senior staffer who've been past Clean50 honourees. "$130 per tonne by 2040 will decimate an industry that all in, across the entirety of the clean economy, is over $200 billion in GDP."
With the right policies, that contribution could triple, he added, "while the oil industry steadily declines."
But even before this week's news, "I have already seen losses," Pitchford told the PM, with one climate-connected firm that had seen 25% annual growth over the last five years now losing 45% of its business activity over the last nine months.
"Energy efficiency engineering firms are seeing massive fall-offs in new business pipelines-they're completing jobs they're on, but their new business opportunities have fallen off a cliff," he added. "All of these are remarkably good jobs for bright, young Canadians that are not easily replaced by AI. These are Canadian companies where the profits stay here."
Corporate Knights Director of Research Ralph Torrie agreed that Canada is "already falling behind" the accelerating global transition to renewable energy.
"We needed and hoped for an aggressive, thoughtful policy push from Ottawa immediately upon the commencement of the Carney government," Torrie told The Energy Mix in an email. "We didn't get that, so we have lost another year, and that is a long time in the fast-moving global energy transition. The retrenchment of the U.S. administration on support for clean energy should have been and still could be an opportunity for Canada."
Source: The Energy Mix
