Montreal, May 9, 2019 – Alberta’s $30 carbon tax is around 50% higher than the rate currently in place in Quebec as a result of its cap & trade system, as shows a Research Paper published today by the MEI.
“There is no reason that justifies such a gap,” argues Jean Michaud, Associate Researcher at the MEI and co-author of the publication. “One province should not pay an effective rate that’s higher than another, or even worse, twice as high, as will be the case in the provinces where the federal carbon tax applies when it reaches $50 per tonne of CO2. We are therefore punishing certain producers more than others, which will certainly hurt an industry already faced with many problems.”
Indeed, the Canadian oil and gas sector is dealing with several challenges, first and foremost the lack of pipelines that is keeping our resources from reaching foreign markets.
“The lack of market access, due to the difficulty of building pipelines, and the numerous delays surrounding energy projects are the challenges that currently have the biggest financial impact on this sector,” explains Germain Belzile, Senior Associate Researcher at the MEI and co-author of the publication. “This lack hurts not only provincial public finances but also the Canadian economy as a whole. We’re talking about a cost of some four billion dollars a year in recent years, but that cost is certainly far higher now since oil production exceeds pipeline capacity.”
To this must be added new regulations that make the process of developing projects more burdensome in an industry where investments have fallen in recent years. In Alberta, for example, permitting delays are much longer than in the United States, our main competitor, which hurts the competitiveness of Canadian companies.
Ottawa is also planning to impose another policy, the Clean Fuel Standard, which will add yet another layer of regulation. It is in fact no more and no less than another carbon tax under a different name.
“The cumulative effect of all of these measures, often adopted piecemeal, will end up stifling the Canadian oil industry, which has already been hit quite hard. Moreover, experts project that the global demand for oil will continue to grow until at least 2040. That’s why Canada must continue to supply some of that demand, in a responsible manner, as it already does, rather than leave its resources in the ground unused in favour of other producing countries—some of which have environmental and human rights records that are far less exemplary than Canada’s,” concludes Michel Kelly-Gagnon, President and CEO of the MEI.
The Research Paper entitled The Cumulative Impact of Harmful Policies – The Case of Oil and Gas in Alberta was prepared by Germain Belzile, Senior Associate Researcher at the MEI, and Jean Michaud, Associate Researcher at the MEI. This publication is available on our website.
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