Little effect on new oldsands development: carbon tax report

Alberta’s incoming carbon taxes will have a minimal effect on new oilsands development compared with oilprices and market access, says a new report.

CALGARY — Alberta’s incoming carbon taxes will have a minimal effect on new oilsands development compared with oil prices and market access, says a new report.

TD Bank economist Dina Ignjatovic said in the paper released Tuesday that if oil prices rise above US$60 a barrel then a carbon tax likely won’t make or break investment decisions at all, while below that price few projects will get approved either way.

“Basically US$60 is that threshold, where before that you’re not going to see a lot of new projects announced anyway,” said Ignjatovic in an interview.

She said below the threshold margins are especially squeezed, so a carbon tax could have some impact, but that boosting efficiencies, more pipelines and higher oil prices heavily outweigh its importance.

“The low price environment is obviously very key for them. And market access is the other thing too,” said Ignjatovic.

“Unless we find more ways to get oil out of Alberta you’re not going to see a huge amount of investment in the province’s oilsands.”

She said Alberta’s carbon tax, which starts at $20 a tonne next year and then to $30 a tonne the year after, provides some certainty for oilsands producers and reward those producers with lower emissions.

Ignjatovic pointed to the Alberta Environment and Parks estimate that most projects would see costs per barrel getting between 50 cents cheaper and 75 cents more expensive at $30 per tonne carbon pricing, though some carbon-intensive projects could see prices rising as much as $4 a barrel.

She said the recent announcement of a federally-mandated carbon tax brings more uncertainty, however, as provinces haven’t said how they’d respond to a mandate calling for $50 per tonne pricing by 2022.

“The murky part is what the federal tax will do on top of Alberta, because there’s very little detail on that,” she said.

If Alberta simply follows its established policies but ramps up the price, the cost per barrel would range between 84 cents cheaper to $1.25 higher, Ignjatovic said.

“It’s still a fairly small amount,” she said. “Some producers will be better off and can actually benefit from this.”

Federal and provincial opposition leaders have called for carbon tax proposals to be scrapped because they say the tax will make Canada’s oil and gas industry less competitive, especially after pro-industry Donald Trump won the U.S. election.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Trudeau unveils details for emergency payment for Canadians

Applications for the Canada Emergency Response Benefit will be accepted starting Monday

‘It’s like ghost towns:’ Canada’s border communities adapt to COVID-19 changes

Entry between Coutts, Alta., and Sweet Grass, Mont., is one of the busiest on the Canada-U.S. border

COVID response offers chance to shift direction of Canadian economy: experts

Many are asking how the economy can be restored without greenhouse gases tagging along

WATCH: Red Deer emergency call centre hours change starting next week

Hours at the City of Red Deer’s COVID-19 emergency call centre will… Continue reading

Alberta Health Services provides COVID-19 prevention tips

Alberta Health Services has a number of recommendations for people amid the… Continue reading

Alberta government website has latest COVID-19 statistics

Red Deer Advocate readers can stay up to date on the COVID-19… Continue reading

With workers at home, feds eye ways to fast-track training program, groups say

How to help workers stuck at home or out of work to prevent their skills from becoming

Hajdu brings anthropology, public health experience to COVID-19 fight

“There’s a piece of me that’s still an anthropologist at heart, if you will”

Spring cleaning can’t be avoided

It’s the perfect time for spring cleaning now that we are confined… Continue reading

Drake does the ‘Toosie Slide’ in new video, shows his mansion and empty T.O. streets

New creative outlet during the COVID-19 pandemic: The “Toosie Slide.”

Singer Pink says she had COVID-19, gives $1M to relief funds

The artist and her three-year-old son displaying symptoms

US braces for more virus deaths; Europe hopes crisis peaking

The number of people infected in the U.S. has soared to more than 300,000

Most Read