Pembina statement on industrial carbon pricing in Canada

CALGARY — CHRIS SEVERSON-BAKER, executive director of the Pembina Institute, made the following statement in response to the Conservative Party of Canada’s pledge to eliminate the industrial carbon pricing system in Canada:

“For more than 15 years, industrial carbon pricing systems in Canada have been reducing emissions from heavy industry. They do this by correcting a market failure, so it is no longer free to pollute. They also collect revenue from heavy industrial operators that exceed their emissions limit and use some of those funds to research and develop emissions-reduction technologies and other solutions. This ensures big polluters — not taxpayers — pay the lion’s share for the type of tech innovation that will ultimately reduce their emissions. For example, Emissions Reduction Alberta, the province’s technology investment agency, reports it has spent around $950 million of industrial carbon tax revenue to date on projects that it estimates will reduce emissions by hundreds of thousands of tonnes per year, if the technologies are successful and deployed at scale.

“If the industrial pricing system is removed and instead, as has been suggested today, investment tax credits for large industrial emitters are expanded, Canadian taxpayers will be asked to fund a much larger share of emissions reductions from the heavy industrial sector. This would put an unfair burden on most Canadians.

“There are solid business reasons why Canada’s heavy industries — like steel, cement, and aluminum production — want to reduce their emissions: so that they can compete in a global market. The EU and the U.K., two important future trading partners for Canada, are currently planning to impose import duties on products that come from countries without strong policies designed to reduce industrial emissions. If our federal industrial pricing system is removed in Canada, our exports of steel, aluminum, cement and other commodities to the EU would be subject to an import tax. In other words, these companies would still have to pay a carbon tax — but the revenue would be taken by foreign governments, rather than used here in Canada to fund industrial emissions reductions.

“More than anything, today’s announcement creates yet more investment uncertainty in Canada. The industrial carbon pricing system that we have in place today gives companies clarity into the future on what the price of a tonne of carbon will be, and crucially how many credits they can earn in the system if they make investments to reduce their emissions. If the industrial carbon pricing system disappeared, so too would the credits that we know many companies have been banking on to inform their investment decisions.

“We should feel proud in Canada that we have a system that elegantly balances the need to make our industries globally competitive with the importance of reducing emissions and protecting the environment — all while limiting the financial burden on everyday Canadians. Overwhelmingly, it is a system that large companies have welcomed — and that other governments around the world have envied.”

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