From pipe dream to a real prospect, Alberta’s ambitious proposal to see a new oil artery built to the Pacific Coast gained more traction Friday, one that could see crude flowing through a new project within eight years. An agreement on increasing Alberta’s industrial carbon tax was signed in Calgary by Prime Minister Mark Carney and Premier Danielle Smith, which could help clear the path for a proposed bitumen pipeline to the West Coast, operating no later than 2033 or 2034, according to officials.
Key Elements of the Agreement
The deal helps cut through a thicket of federal regulatory and policy issues while increasing the province’s industrial carbon price over the next 14 years to an effective rate of $130 per tonne of emissions. Under the agreement, Alberta’s industrial carbon tax will climb from the current rate of $95 per tonne to $130 per tonne by 2040. This is below the previous federal target of $170 per tonne by 2030. Carbon credits currently trade for about $40 per tonne.
The industrial carbon price under Alberta’s Technology, Innovation and Emissions Reduction (TIER) system will also have a price floor, expected to be $60 by the end of this decade and reaching $110 by 2040. The details are complex, but the direction is important, as it removes one of the most difficult issues within the initial memorandum of understanding (MOU) signed last November.
Pathways Carbon Capture Project
Just as significant, the deal will put the ball back in the court of Canada’s largest oilsands producers on advancing a major carbon capture project, as the pipeline and decarbonization initiative are mutually dependent on each other. Negotiations are set to ramp up between both governments and the Oil Sands Alliance to see if the companies are prepared to build the multibillion-dollar Pathways carbon capture network in northern Alberta.
“I’m very confident that a pipeline is going to be built, and the Pathways project is linked to this — that one doesn’t go ahead without the other,” Smith said in an interview. “Everybody is keen to get together and just see where the points of difference might be, and how we can bridge those. I get a real sense of goodwill as we go into these discussions.”
If built, the Pathways project would be the world’s largest global carbon capture and storage network. “The proposed pipeline depends on that alliance,” Carney added.
Industry and Expert Reactions
Kevin Birn, Canadian oil markets chief analyst with S&P Global Energy, commented: “This MOU is fundamentally talking about the future of Canadian production, which direction and where it goes to in the world, and the future of Canadian climate ambition. It’s a big deal.”
The agreement solidifies details of the initial energy MOU signed by the two governments last November, setting a price for Alberta’s industrial carbon. This outstanding issue was crucial for moving the agreement forward on the federal-provincial energy pact.
