MOU with Alberta puts Canada’s commitment to net zero emissions by 2050 firmly out of reach

The MOU agreement’s unreasonable compromises on industrial carbon markets and clean electricity regulations, and the implications for weakening policies in other provinces, will undermine emissions reductions and Canada’s low-carbon competitiveness.

15.05.26

OTTAWA—Rick Smith, President of the Canadian Climate Institute, made the following statement in response to the Implementation Agreement for the Canada-Alberta Memorandum of Understandingon industrial carbon pricing and clean electricity policy:

“The final Canada-Alberta MOU implementation agreement will put Canada’s target of net zero by 2050 well out of reach. It also means that Canada will be on path to achieve its 2030 target at a much later date, creating more than a decade of delay for needed progress. 

“Alberta is home to the biggest carbon market in the country, covering roughly a quarter of all national emissions. While the changes to the province’s industrial carbon market may improve on the status quo there, this is the lowest of bars. The MOU agreement’s unreasonable compromises on industrial carbon markets and clean electricity regulations, and the implications for weakening policies in other provinces, will undermine emissions reductions and Canada’s low-carbon competitiveness. 

“While the MOU agreement promises to make improvements to how the carbon market functions, the announced design changes will not be strong enough to fix market fundamentals and reach the intended effective market credit price by 2040. That undermines the credibility of the deal. Financial mechanisms such as carbon contracts for difference could improve long-term certainty but the design details leave a number of questions unanswered.  

“Ultimately, 2040 is too late to reach a market carbon credit price of $130 a tonne in Alberta. That is especially true given the cost to oil sands producers is cents per barrel on average. The deferred timeline on carbon pricing risks watering down industrial carbon pricing systems in other provinces, like B.C., which would otherwise be at a significant competitive disadvantage. 

“Further, the federal government’s plan to put the Clean Electricity Regulations in abeyance without any credible path forward increases policy uncertainty in Alberta and opens the door for more provinces to seek special treatment. That risks locking in more long-lived, high-emissions gas-fired power, exposing ratepayers to more volatile energy costs, and further stifling growth in Alberta’s previously thriving renewable energy sector.

“In response to the global energy shock underway, our international peers are leaning into the clean energy transition as the key to their future competitiveness, energy sovereignty, and affordability; Canada meanwhile is backing off, despite the long-term vision of growth fuelled by abundant and affordable clean electricity outlined in yesterday’s electricity strategy. 

“The Canadian Climate Institute will conduct comprehensive new modelling to assess the emissions-related implications of the full MOU agreement package in the days ahead, and we look forward to publishing that analysis to provide an informed basis for future policy development.”

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Claudine Brulé
(226) 212-9883
cbrule@climateinstitute.ca

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The Canadian Climate Institute is an independent climate policy research organization that produces rigorous research, analysis, and economic modelling, drawing on experts and leaders across the country. Our work focuses on: accelerating clean growth and low-carbon competitiveness; measuring progress in Canada’s clean energy transition; amplifying Indigenous perspectives and climate solutions; unlocking sustainable investment; and making our economy and infrastructure more resilient to a warming climate.

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