Taxes and Regulations Stifle Alberta Energy Competitiveness

A new study reveals that taxes and regulations in Alberta are increasing the cost of producing new energy, making it less competitive than the US. The study compares the impact of corporate, royalty, and energy taxes on production in Alberta, Texas, and New Mexico for oil, gas, and power industries.

The existing tax and royalty system in Alberta is tax competitive except for conventional oil, despite differences in tax systems among the three jurisdictions. However, with a carbon tax at $95, Alberta's conventional oil is disadvantaged compared to projects in New Mexico or Texas. Natural gas production remains tax competitive.

As Alberta's effective carbon tax rate increases by raising the rate and/or limiting allowances, both oil and natural gas production will be heavily disadvantaged compared to Texas. The study also highlights that the biggest impact of the carbon tax will be on the electric power industry, significantly increasing power prices in Alberta and impacting competitiveness.

US and Canadian capital subsidies encourage investments in carbon capture, utilization, and storage but do not improve cost competitiveness since the subsidies are offset by CCUS costs for marginal investments.