Key Takeaways
- The federal government has suspended clean electricity regulations in Alberta, which were meant to reduce pollution and meet climate goals.
- Carbon pricing is expected to play a dominant role in reducing emissions, but its effectiveness is still uncertain.
- Alberta has committed to achieving a net-zero power grid by 2050 and will negotiate an agreement to raise the price of carbon credits.
- The Canadian Climate Institute believes that robust carbon pricing can help Alberta achieve its emissions goals, but the Pembina Institute is skeptical.
- The federal government has not explained how it will ensure Canada’s climate goals will be met without the regulations.
Introduction to the Agreement
The recent memorandum of understanding signed between Prime Minister Mark Carney and Alberta Premier Danielle Smith has significant implications for Canada’s climate policy. The federal government has suspended the clean electricity regulations that were meant to reduce pollution and meet climate goals. These regulations were expected to have the biggest impact in Alberta, displacing nearly 214 million tonnes of pollution, equivalent to removing the tailpipe emissions from more than 49 million cars. The suspension of these regulations has raised concerns about how the country will meet its climate goals.
The Role of Carbon Pricing
Carbon pricing is expected to play a dominant role in reducing emissions, but its effectiveness is still uncertain. Environment Minister Julie Dabrusin has stated that she has the power to negotiate a side deal with Alberta that achieves similar outcomes to the suspended regulations. This deal would be in the form of an equivalency agreement, which would allow Alberta to meet the objectives of the regulation through its own regional path. The Canadian Environmental Protection Act authorizes Dabrusin to enter into such deals with provinces, territories, and Indigenous governments. However, the effectiveness of carbon pricing in reducing emissions is still a topic of debate.
Alberta’s Plan to Reduce Emissions
Alberta has committed to achieving a net-zero power grid by 2050, which is the same goal outlined in the clean electricity regulations. The province argues that the regulations would have forced it to phase out natural gas power generation and plunge it into blackouts. However, the regulations do not ban natural gas power, but rather require facilities to build out carbon capture and storage and purchase carbon credits to offset emissions. Alberta plans to hit its emissions targets through its carbon pricing system, the Technology Innovation and Emissions Reduction (TIER) program, which already regulates heavy electricity generation emitters.
Effectiveness of Carbon Pricing
The memorandum signed with Ottawa requires Alberta to negotiate an agreement by April 1 to raise the price of carbon credits traded in the TIER system. However, studies have shown that a strong enough price on emissions alone may not be enough to put the country on track to achieve its climate targets. According to one assessment, even a carbon price of $170 per tonne would be insufficient. The memorandum committed to raising the province’s effective carbon price to a minimum of $130 per tonne. The Canadian Climate Institute think-tank believes that robust carbon pricing can help Alberta achieve its emissions goals, but the Pembina Institute is skeptical.
Concerns and Uncertainties
The deal itself does specify that carbon pricing alone will not do the job of reducing the emissions from Alberta’s electricity sector. The memorandum of understanding states that it will factor in "all other measures" before it permanently suspends the clean electricity regulations. However, what those other measures are remains unknown. The Pembina Institute is concerned that the suspension of the regulations will send a negative signal to Alberta’s renewable sector, which is already struggling. The effectiveness of the agreement in reducing emissions and meeting climate goals is still uncertain, and the federal government has not explained how it will ensure Canada’s climate goals will be met without the regulations.
Conclusion and Future Implications
The suspension of the clean electricity regulations in Alberta has significant implications for Canada’s climate policy. While carbon pricing is expected to play a dominant role in reducing emissions, its effectiveness is still uncertain. The agreement between the federal government and Alberta is a step towards achieving a net-zero power grid by 2050, but the details of the plan and its effectiveness in reducing emissions are still unclear. The federal government needs to provide more clarity on how it will ensure Canada’s climate goals will be met without the regulations, and the effectiveness of the agreement will need to be closely monitored in the coming years.
