Page 5 - NorthAmOil Week 13 2021

NorthAmOil COMMENTARY NorthAmOil

The hike in the carbon
tax over the coming
years has implications
for oil sands producers,
who have been trying
to bring down their
emissions intensity.

pandemic’s impact, Trudeau had committed to pipeline, the two North American leaders have
reducing Canada’s emissions by 124mn tonnes already started working to deepen their coun-
from 2005 levels by the end of 2020 but was tries’ co-operation on climate change issues.
estimated to have only achieved around 1mn This is a significant turnaround from former US
tonnes of actual reductions. President Donald Trump, who showed no con-
Following these failures, he is attempting to cern over climate change and took the US out of
turn Canada’s performance on decarbonisation the Paris climate agreement – though Biden has
around. Indeed, the plans to hike the carbon tax since returned his country to the accord.
to CAD170 per tonne by 2030 comprise one Given the anticipated impact of the carbon
of the world’s most aggressive carbon-pricing tax on provinces and certain industries, Trudeau
regimes. can expect to encounter further resistance to his
Canada has now committed to reducing its plans. Indeed, Alberta Premier Jason Kenney
GHG emissions by 30% compared with 2005 said last week that his province would “continue
levels by 2030, and when the government to fight to defend our exclusive provincial power
unveiled its net-zero plans in December, it said to regulate our resource industries”.
it would exceed this target. Alberta’s opposition comes as no surprise
Give the country’s past track record, scep- given that the province contains Canada’s Investments
ticism over how realistic these targets are is giant oil sands resources, which have become
understandable. However, Trudeau appears renowned for being emissions-intensive. Oil in abatement
increasingly determined to make decarbonisa- sands producers have been working to bring options such as
tion a priority – though it is worth noting that down the emissions intensity, and it is possi-
future governments may have a different posi- ble that the rising carbon tax could help spur carbon capture
tion. Indeed, the opposition Conservative Party these efforts. Investments in abatement options
has vowed to scrap national carbon pricing if it such as carbon capture and storage (CCS) are and storage (CCS)
is voted into government. Earlier this month anticipated. Under the carbon tax legislation,
members of the party voted against adding the alternative to paying the tax for industrial are anticipated.
green policies to its agenda, or language saying is buying credits to offset emissions from those
that climate change is real. who are doing better to reduce their own. Either
way, the tax looks set to increase the cost burden
What next? on oil sands producers, who have already been
Trudeau’s efforts will also likely be bolstered by hit hard by the collapse in oil prices since 2014.
the recent election of US President Joe Biden, And despite opposition to the federal carbon
who has already signalled a strong commitment tax from Alberta and others, the Supreme Court
to combatting climate change since he took office ruling means the hikes are constitutional and
in January. can no longer be stopped while a Liberal gov-
Though US-Canadian relations took a hit ernment is in power. Opponents to the plans
thanks to Biden’s immediate move to revoke will have to turn their attention to how best to
the cross-border permit for the Keystone XL oil manage the tax hikes over the coming years.™

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