The future of Canada's carbon pricing system is in doubt after 14 oil and gas industry executives and conservative leaders called for its abolition.
Uncertain future
The future of Canada’s six-year-old carbon pricing system is in doubt after 14 oil and gas executives and the leader of the opposition conservatives called for its repeal this week. Repealing the system, which aims to reduce pollution by providing a financial incentive for heavy industries to reduce carbon emissions, could cast doubt on the viability of the Pathways Alliance carbon capture project.
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| Canada's oil and gas industry executives say the current federal carbon pricing system should be abolished so that provincial governments can set more appropriate carbon regulations. Illustration photo |
Canada is now facing shifting choices as tariffs push it to seek new energy markets. The political shift has energized those in Canada who believe the country has prioritized climate goals over the economy for too long.
Opposition Conservative leader Pierre Poilievre has made the federal carbon pricing system a potential election issue on March 17, pledging to abolish it if he wins the vote scheduled for April 28. The system, which has been in place since 2019, aims to reduce pollution by providing financial incentives for heavy industries to reduce carbon emissions.
Pierre Poilievre said he would repeal federal regulations and replace them with expanded federal financial incentives such as tax credits to encourage companies to reduce pollution. Decisions on carbon pricing would be left to individual provinces.
Under current law, industrial activities that exceed a set threshold of emissions must pay the government or buy carbon credits to offset their environmental impacts. The system is designed to become more stringent over time, with the price of carbon increasing at set intervals.
Liberal leader Mark Carney, who recently took office as prime minister and is leading the polls closely against the opposition Conservatives of Pierre Poilievre, said on March 18 that the country needs an industrial carbon price if it wants to boost trade with allies. The United Kingdom, for example, has announced plans to implement a carbon tax on products imported from countries with less stringent climate policies.
In a public letter this week, 14 Canadian oil and gas executives said the current federal carbon pricing system should be abolished so that provincial governments can “ set more appropriate carbon regulations .”
On March 21, the Pathways Alliance, a group of six of Canada's largest oil sands producers, proposed a $16 billion C$11.47 billion carbon capture and storage project to significantly reduce the industry's greenhouse gas pollution, drawing increasing criticism.
Pathways posted a statement on its website, emphasizing the need for federal policies to promote “ growth of Canada’s oil sands industry ” and calling for the abolition of “ the uncompetitive industrial carbon pricing system .”
Several provinces, including oil-producing Alberta, already have their own industrial carbon pricing systems. Under current regulations, provincial systems must be as stringent as the federal system.
The executives argued in the letter that the national system puts Canada at a competitive disadvantage compared to regions without the system, such as the United States.
However, many analysts say that large corporate investments in carbon reduction will not make sense without the financial incentive of a price on emissions.
“ Until there is clarity about the future of policy… it is difficult to see whether the investment will be made,” said Michael Bernstein, CEO of the Clean Prosperity think tank.
The discussion process is slowed down.
The oilsands industry is Canada’s largest emitter, and the proposed Pathways project would be one of the world’s largest carbon capture and storage developments if completed. Pathways applied for a carbon pipeline permit last March, but has yet to make a final investment decision to proceed with the project.
Five of the six Pathways member companies - Canadian Natural Resources (CNQ.TO), Suncor Energy (SU.TO), Imperial Oil (IMO.TO), Cenovus Energy (CVE.TO) and MEG Energy (MEG.TO) - signed a letter from executives calling for the current industrial carbon pricing system to be abolished.
A sixth Pathways member, ConocoPhillips Canada (COP.N), did not sign the letter. A company spokesman said in an email on March 21 that ConocoPhillips’ commitment to the Pathways Alliance remains unchanged.
The letter was also signed by the chief executives of ARC Resources (ARX.TO), Veren (VRN.TO), Pembina Pipeline (PPL.TO), Enbridge (ENB.TO), Whitecap Resources (WCP.TO), TC Energy (TRP.TO), Tourmaline Oil (TOU.TO), Strathcona Resources (SCR.TO) and South Bow Corp (SOBO.TO).
In an interview with a US media outlet this month, the CEO of oil and gas company Canadian Natural Resources acknowledged the challenges associated with the upcoming election and uncertainty about the future of energy and climate policy.
“If you look at that combined with the U.S. administration's stance on tariffs and other issues, the Pathways discussions have slowed down a little bit,” said Canadian Natural Resources CEO Scott Stauth.
In recent months, Pathways has been in talks with the federal government to provide a safeguard mechanism for industrial carbon pricing, which would protect projects from future government removal of carbon pricing. However, no agreement has been reached.
A weaker carbon pricing system would leave the government with few ways to incentivize projects like Pathways’ plan, other than direct subsidies, said Chris Severson-Baker, CEO of the clean energy think tank Pembina Institute.
“ Pathways could simply become something that taxpayers have to pay for ,” he said.
| Mark Carney, leader of Canada's ruling Liberal Party, who recently took office as prime minister and is holding a narrow lead in polls over the opposition Conservative Party of Pierre Poilievre, said on March 18 that the country needs an industrial carbon price if it wants to boost trade growth with allies. |
Source: https://congthuong.vn/he-thong-gia-carbon-cua-canada-co-the-bi-bai-bo-379503.html
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