OTTAWA—Dave Sawyer, Principal Economist at the Canadian Climate Institute, made the following statement in response to the Alberta government’s Order in Council to amend the Technology Innovation and Emissions Reduction (TIER) Regulation
“Just one week after the Alberta-Canada Memorandum of Understanding (MOU), Alberta has introduced regulatory changes that will flood the province’s industrial carbon pricing market with credits and further weaken the carbon price signal for major emitters. This moves the system farther from the improvements both governments committed to.
“By issuing new compliance credits for direct investment and reactivating previously used credits, Alberta is adding more supply to an already oversupplied market. These changes work against the direction set out in last week’s agreement, which included commitments to strengthen Alberta’s industrial carbon pricing system. When Alberta first signalled its intent in September, TIER credit prices crashed to below $20. This change locks in that crash, and puts significant downward pressure on future prices.
“Establishing credits for direct investment risks compromising the credibility of TIER. It could result in crediting investments without evidence they deliver real emissions reductions, or crediting activities that may not reduce emissions at all, while also increasing the oversupply of credits in the system. The amendment also places no practical limits on how many credits can be issued, which amplifies the oversupply challenge.
“In the MOU, the province and the federal government agreed that TIER would ‘ramp up to a minimum effective credit price of $130/tonne’. Achieving this minimum effective credit price by 2030 would require immediate steps to close loopholes in the credit market and address the oversupply of credits that is driving down the value of credits today and reducing the overall effectiveness of the system. Instead, introducing new investment credits increases oversupply, weakens the price signal, and moves Alberta further away from the path needed to reach $130 per tonne.
“Billions of dollars of investment in low-carbon projects in Alberta depend on strengthening the province’s carbon credit market. These latest regulatory changes are a big step in the wrong direction.”
RESOURCES
- Fact sheet | Why industrial carbon pricing costs consumers next to nothing
- Commentary | The federal government should act decisively to modernize industrial carbon pricing
- Commentary | One simple fix for Canada’s industrial carbon pricing systems
- Explainer | Five characteristics of effective industrial carbon pricing
- Statement | Alberta weakens its own industrial emissions-trading market, threatening investment in climate solutions
- Statement | Freezing Alberta’s industrial carbon price will undermine investment and certainty for business
CONTACT
Krystal Northey (Mountain Time)
Public Affairs Lead
Canadian Climate Institute
(226) 212-9883
About the Canadian Climate Institute
The Canadian Climate Institute is Canada’s leading climate change policy research organization. The Institute produces rigorous analysis, economic modelling, and in-depth research focused on incentivizing clean economic growth and low-carbon competitiveness, reducing emissions and accelerating Canada’s net zero energy transition, and making our economy and infrastructure more resilient to a warming climate.
