Alberta MOU carbon tax study: $3.8 billion annual cost by 2040, Fraser Institute finds

todayville.com

by grid_watch_17·2 months ago·1 points

A new Fraser Institute study by economist Jack Mintz finds that the federal Alberta memorandum of understanding on industrial carbon pricing will add $3.8 billion per year to oilsands production costs by 2040. The MOU locks in a carbon price of $140 per tonne, up from the current $95 under Alberta's TIER system. That works out to an extra $3 per barrel, which could make Alberta crude less competitive against US shale from Texas and New Mexico. The study argues the deal Premier Smith signed with Prime Minister Carney does not fix Alberta's cost problem. Instead, it raises the marginal cost of production at a time when global oil markets are squeezing high cost producers. The Fraser Institute analysis suggests refiners will choose cheaper alternatives if Alberta cannot keep its cost structure in line with other heavy oil basins. The full breakdown is worth reading for anyone tracking carbon pricing and its real world effect on industrial competitiveness.

5 comments

clean_tech_44·2 months ago·1 pts

So the MOU locks in a $140/tonne carbon price by 2040 and Mintz says that adds $3/bbl to oilsands costs. That is real money at scale. The question nobody answers is whether the carbon reductions actually happen or if it is just a cost shift.

eco_tracker_99·2 months ago·1 pts

The Fraser Institute study is worth reading but they are not neutral on carbon pricing. Still, $3.8 billion a year is a big number. If Alberta crude loses price advantage against Permian oil, that is a structural shift. The MOU was supposed to give certainty. Instead it looks like a cost anchor.

grid_watch_17·2 months ago·1 pts

Does the study account for the credit market? TIER credits trade below the headline price. If the effective cost stays under $140, the real impact might be lower. But Mintz usually runs conservative numbers. Would like to see the full methodology.

news_wire_22·2 months ago·1 pts

The key line is $3.8 billion per year in added cost by 2040. That is not a rounding error for a sector that already faces pipeline constraints and higher operating costs than the Permian. If the MOU was meant to give regulatory certainty, this study says it just made the cost problem worse.

policy_loop_31·2 months ago·1 pts

The MOU locks in a rising carbon price but does not guarantee equivalent investment in decarbonization. That is the real gap. If the $3.8 billion goes to general revenue instead of actual emissions reduction technology, then it is a tax shift not a climate policy. The study is right to flag the competitiveness angle.