Prime Minister Mark Carney and Alberta Premier Danielle Smith signed a memorandum of understanding Nov. 27 that both governments said positions Canada as a global energy superpower while also meeting climate goals.Jeff McIntosh/The Canadian Press
The energy accord struck between Ottawa and Alberta last week could be a “turning point for decarbonization,” with the potential to attract more than $90-billion in low-carbon capital investment to the province, says the head of a national climate policy organization.
Part of the memorandum of understanding signed last Thursday by Prime Minister Mark Carney and Alberta Premier Danielle Smith lays the groundwork for a new oil pipeline from Alberta to the West Coast. But Michael Bernstein, chief executive of Clean Prosperity, said the agreement is about more than pipelines.
A new analysis from the climate policy think tank found that $90-billion worth of projects could be unlocked through implementing the MOU, cutting more than 70 megatonnes of Alberta’s annual emissions.
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The report, released Thursday, was based on in-depth modelling of Alberta’s industrial economy and consultation with experts, industry and policy makers.
“We really do think this could be a turning point for decarbonization,” Mr. Bernstein said in an interview.
“The key is that both sides have to continue to have skin in the game over the long term to make any of these ideas … in the MOU turn into real results and real progress.”
As Clean Prosperity predicted an influx of green investments, Mr. Bernstein’s colleagues at another organization of which he is a member – the Net-Zero Advisory Body (NZAB) – quit in protest of Ottawa’s promotion of new fossil fuel projects and relaxation of climate regulation. NZAB co-chair Simon Donner and adviser Catherine Abreu stepped down from the organization, which was set up by the government in 2021 to provide science-based advice on decarbonization policies.
The prominent climate-action advocates posted resignation letters on their LinkedIn profiles this week, saying that changes in priorities under Mr. Carney as detailed in the MOU and Bill C-5 led them to their decisions. “I was comfortable chairing an appointed body whose advice is considered but ultimately rejected – after all, no one elected us. I was not comfortable with the process becoming neglected or performative, and it had begun to feel that way to me,” Mr. Donner wrote.
Their resignations follow former environment minister Steven Guilbeault’s decision last week to quit the Liberal cabinet in response to the details of the deal between Alberta and Ottawa.
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The lion’s share of the potential investments outlined in the Clean Prosperity report are in the carbon capture, utilization and storage sector. An example is Pathways, a massive proposed CCUS project to transport carbon captured from production in Alberta’s oil sands 400 kilometres away to an underground hub near Cold Lake, Alta., with the aim of reducing emissions by 22 megatonnes a year.
Mr. Carney has said that reducing emissions from the oil sands would be a “necessary condition” to unlocking new pipelines and construction and financing of the Pathways project was specifically mentioned in the MOU.
But Pathways would be a “relatively small component” of the 70 megatonnes in emissions reduction identified by Clean Prosperity, Mr. Bernstein said.
“There are many other projects that have greater value – in terms of investment, job creation, emissions reductions – than Pathways. There is a big opportunity for Alberta here, regardless of whether the Pathways project moves ahead or not.”
Those other projects run the gamut of industrial processes that emit large amounts of carbon dioxide, including chemical and cement plants, refineries and other oil and gas processes.
One of the reasons Mr. Bernstein believes the MOU can draw such huge investments is that it will see the federal and Alberta governments double-down on carbon pricing, which he calls “the most important climate policy that we have at our disposal.”
The agreement outlines specific commitments on that front, including Alberta ramping up its carbon credit price to a minimum of $130 a tonne.
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Fleshing out the details of how and when Alberta gets to $130 a tonne will need to be done in tandem with improving the province’s carbon market, he said. In August, credit and offset prices were more than 55 per cent lower than in the same month in 2024, according to an S&P Global Commodity Insights analysis, at $24.50 a tonne.
“Nothing goes forward without significant reform to that market,” Mr. Bernstein said.
Part of that reform could be through a mechanism generally known as carbon contracts for differences or CCfDs, which involves the government taking on revenue risk by prepurchasing or otherwise guaranteeing the value of carbon credits. The contracts essentially act as insurance policies that underpin the carbon pricing system.
Such an insurance policy needs all players who can influence potential payouts to be at the table together, Mr. Bernstein said. That hasn’t yet happened, with the federal government hesitant because Alberta controls the day-to-day carbon credit market, and the province reluctant because of potential costs and federal rules.
Now that both have said they’re willing to work together to provide certainty for investors, he said, there is a good chance to get past some of the previous obstacles on the CCfD file.
With a report from Jeff Jones