New report: Carbon Pricing Approaches

EDMONTON — As Canada faces increasing scrutiny of its weak climate change policy for oilsands development, a new report illustrates how both Alberta and the federal government can better manage emissions and improve the country’s international reputation.

The new Pembina Institute report, Carbon Pricing Approaches in Oil and Gas Producing Jurisdictions, compares climate change policy approaches in Alberta, British Columbia, California, Australia, Norway and the European Union. For each policy, the assessment looks at the incentive to reduce greenhouse gas (GHG) emissions (measured in dollars per tonne), the percentage of emissions receiving that incentive, and other metrics.

“The oilsands are under the microscope because they are the single biggest factor in determining whether or not Canada can live up to our climate commitments,” says report lead author P.J. Partington, technical and policy analyst for the Pembina Institute. “Alberta already has a policy in place to slow the growth of those emissions, but it needs to be much stronger.”

Alberta’s carbon pricing policy, known as the Specified Gas Emitters Regulation or SGER, encourages investment in projects that cost up to $15 per tonne of emissions reduced. Economic modeling studies show that for Canada to achieve its 2020 climate target all sectors must invest in projects that cost up to $150 per tonne.

“There is a big gap between the policy in place in Alberta and the bar we need to reach,” says Matt Horne, climate change program director for the Pembina Institute. “Other jurisdictions are already several steps ahead of Alberta, so the province can learn from their successful experiences in strengthening its own approach.”

British Columbia, for example, has a carbon tax that is set at $30 per tonne. And Norway — which produces similar amounts of oil and gas to Alberta — sets the bar highest, with a $71 per tonne carbon tax for its oil and gas sector.

There is currently no federal climate change policy in place for the oilsands, though Canada is in the process of preparing GHG regulations that are expected to take a similar approach to Alberta’s SGER for the oil and gas sector nationally.

“Whether the leadership to control those emissions comes from Alberta or the federal government doesn’t really matter,” says Horne. “What matters is that we put strong policies in place to encourage companies to invest in solutions that reduce emissions.”

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Visit the Pembina Institute’s website to download a copy of Carbon Pricing Approaches.