Alberta's Revised Carbon Pricing Schedule Favors Oil Sands Producers

The Canadian province of Alberta has revised its carbon pricing schedule, effectively making it a marginal cost for oil sands producers. According to a report by G. Kent Fellows, a fellow-in-residence for the C.D. Howe Institute, the updated pricing will result in oil sands facilities paying less than $2 per barrel.

The revised schedule reduces the rate at which the price per tonne increases over time and lowers the overall top price from $170 per tonne of carbon dioxide by 2030 to $115 per tonne in 2030 and $140 per tonne by 2040. The report notes that this change will alleviate the burden for oil sands companies to comply with the TIER system, since the resulting prices are so low.

Fellows' analysis found that even under a hypothetical projection of payments under the pre-MOU scheme, no facility would pay more than $10 per barrel. The report also suggests that the current low prices in the TIER emissions credit market and the low overall costs for the oil sands suggest that current decarbonizing price signals are weaker at the margin than often assumed.