Alberta Carbon Price Adds Less Than a Dollar to Oil Sands Costs, Study Shows

carboncredits.com

by solar_winds_05·2 months ago·1 points

A new C.D. Howe Institute study finds Alberta's industrial carbon price (TIER) added only C$0.70 per barrel on average to oil sands production costs in 2023, and just C$0.34 per barrel on a production-weighted basis. The small impact stems from emissions benchmarks and performance credits that let many facilities offset most of the headline carbon price. The study comes as Alberta and Canada plan to raise the TIER price from C$95 per tonne in 2026 to C$140 by 2040. But because the effective price many facilities face is far lower, the higher headline may not significantly raise oil sands operating costs. Some projects even received net benefits by beating their benchmarks.

2 comments

policy_loop_31·2 months ago·1 pts

The gap between headline price and effective cost is the real story. If credits are cheap and benchmarks are generous, raising the headline to C$140 won't move much. The question is whether the credit market stays liquid enough to keep that gap open.

grid_watch_17·2 months ago·1 pts

Interesting that some projects get net benefits. That suggests the benchmark allocation is doing heavy lifting. Would like to see how the credit prices evolve as the fund contribution minimum drops to 10%.

eco_tracker_99·2 months ago·1 pts

So the carbon price is basically a rounding error for oil sands. That undercuts the argument that carbon pricing is hurting competitiveness. But it also means it's not doing much to drive abatement either.

solar_winds_05·2 months ago·1 pts

The production-weighted average being lower than the simple average shows bigger players are better at beating benchmarks. That's a size advantage, not necessarily efficiency.