The statue representing justice looks out from the Supreme Court of Canada over the Parliamentary precinct in Ottawa, Thursday March 25, 2021. THE CANADIAN PRESS/Adrian Wyld

Court ruling on federal carbon price both clarifying and worrying, say experts

Court ruling on federal carbon price both clarifying and worrying, say experts

CALGARY — The Supreme Court of Canada’s ruling that the federal carbon price is constitutional raises questions about Canada’s ongoing ability to compete with other energy producers around the world, an oil and gas expert said Thursday.

The ruling represents a shift in power to Ottawa from the provinces which produce most of Canada’s oil and gas and have the most expertise in regulating, promoting and understanding the industry, said Richard Masson, an executive fellow at the University of Calgary’s School of Public Policy.

He said that’s a worry because if the price on carbon is set too high in an effort to encourage people to use less fossil fuel, it will allow producers in countries with lower standards to grab market share away from Canadian companies.

“I think we’ve got years of trying to strike the right balance yet to come but we’ve got a better framework, more certainty,” Masson said in an interview.

“If we don’t see the production growth here, it doesn’t mean the world is better off, it just means somebody else is producing the oil because, at the end of the day, it’s overall demand that has to be satisfied.”

Other observers said the ruling means higher costs for both consumers and industry as Ottawa intends to increase the carbon price from $50 per tonne in 2022 to $170 per tonne by 2030.

If prices reach that level, it will make sense for industrial emitters to spend more to reduce their emissions as opposed to simply buying credits to offset them, said Duane Reid-Carlson, CEO of electricity consultancy EDC Associates in Calgary.

“At $170 a tonne, what we think is going to happen is you’re going to start seeing physical abatement, and I think that’s the intent of the pricing target, to see real emissions reductions,” he said.

An updated EDC report concludes the emissions reductions and an increase in renewable energy capacity will likely work together to moderate the market price of carbon offsets, he said.

In a report, National Bank financial analyst Amber Brown said a federal carbon tax could lead to “more clarity, transparency and liquidity” regarding the carbon offsets market, agreeing that would trigger greater spending on emission-reducing technology.

The ruling provides needed clarity for the oil and gas industry going forward, said Masson, pointing out that a new oilsands project could be expected to produce oil for 30 or 40 years and builders want to have as much certainty as possible before committing billions of dollars in capital.

It’s possible Canada can increase production by about one million barrels per day over the next decade even with higher carbon pricing, he said, although that could make it more difficult for the country to meet its emission reduction goals.

“We want to produce resources that the world needs as efficiently as possible. That’s what the regime should be striving for, not just trying to overtax our domestic resources, meaning somebody else is going to be producing them somewhere else in the world,” he said.

In a statement, CEO Tim McMillan of the Canadian Association of Petroleum Producers said the oil and gas industry is developing “world leading technology” to reduce emissions.

“Based on the Supreme Court of Canada’s decision, it will be important for the federal government and provinces to work together to support Canada’s environmental and economic objectives,” he said.

“In Canada, each province has very different opportunities to mitigate climate change based on their unique circumstances, and we support continued flexibility to allow for provincial input.”

Goldy Hyder, CEO of the Business Council of Canada, welcomed the Supreme Court ruling but said convincing business to invest the billions of dollars needed to cut emissions will require a stable and predictable regulatory environment, not just carbon pricing.

The ruling allows Canadians to move forward with more clarity but co-operation between Ottawa and the provinces to find solutions that recognize the unique circumstances in each province is essential, said Marla Orenstein, director of the natural resources centre at the Canada West Foundation.

This report by The Canadian Press was first published March 25, 2021.

Dan Healing, The Canadian Press

carbon tax

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

Just Posted

Kids at Lotsa Tots West Day Care in Red Deer act out how a caterpillar moves with co-owner and instructor Shireen Sewcharran-Wiebe. Child care providers are hoping Alberta’s provincial government will help fund the national child care program announced this week. (Photo by LANA MICHELIN/Advocate staff).
Alberta day care providers hope Alberta will get onboard with national child care program

Some question whether the UCP’s ideology will stand in the way

Alberta Premier Jason Kenney shakes hands with Jason Nixon, minister of Environment and Parks after being sworn into office, in Edmonton on Tuesday April 30, 2019. Town council from the largest municipality in Nixon's constituency is concerned over the province's consultation plans for open-pit coal mining in the Rocky Mountains. THE CANADIAN PRESS/Jason Franson
Town of Rocky Mountain House wants better coal consultation

ROCKY MOUNTAIN HOUSE, Alta. — Town council from the largest municipality in… Continue reading

Education Minister Adriana LaGrange was in Red Deer on Friday to provide an update on the province's COVID-19 response in schools.
Photo by PAUL COWLEY/Advocate staff
Alberta government aiming for more financial literacy learning in junior and senior high schools

Government providing grants to organizations who will help design financial literacy programming

Two roundabouts will be built at each end of the Highway 2 and McKenzie Road overpass in Red Deer County at the south end of Gasoline Alley. Major detours will be in place this summer while construction is underway. Photo by PAUL COWLEY/Advocate staff
Powerline work causes delays on Highway 2 in Red Deer

Southbound drivers on the QEII are experiencing delays Wednesday morning. Powerline work… Continue reading

Ponoka RCMP said Traytyn Okeymow, 22, was last seen at this residence at about 9:45 p.m. on April 4. (Photo contributed)
Missing man located by Ponoka RCMP

Ponoka RCMP seek public’s help

A vial of the Medicago vaccine sits on a surface. CARe Clinic, located in Red Deer, has been selected to participate in the third phase of vaccine study. (Photo courtesy www.medicago.com)
Red Deer clinical research centre participating in plant-based COVID-19 vaccine trial

A Red Deer research centre has been selected to participate in the… Continue reading

Canadian Prime Minister Justin Trudeau looks at a television screen as he listens to United States President Joe Biden deliver a statement during a virtual joint statement following a virtual meeting in Ottawa, Tuesday, February 23, 2021. THE CANADIAN PRESS/Adrian Wyld
‘We hope to help a little more’: Biden says he spoke to Trudeau about more vaccines

WASHINGTON — Canada can look forward to an unexpected shot in the… Continue reading

The Mission Correctional Institution in Mission, B.C. is pictured Tuesday, April 14, 2020. A new federal study found that people released from prison were much more likely than the general population to have trouble finding gainful employment, even over a decade after returning to society. THE CANADIAN PRESS/Jonathan Hayward
Ease employment hurdles for former prison inmates, federal study urges

OTTAWA — A new federal study found that people released from prison… Continue reading

Governor of the Bank of Canada Tiff Macklem holds a press conference at the Bank Of Canada in Ottawa on Wednesday, Oct. 28, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Bank of Canada keeps rate on hold, sees brighter economic outlook

OTTAWA — The Bank of Canada is keeping its key interest rate… Continue reading

Chief Public Health Officer Theresa Tam speaks during a technical briefing on the COVID pandemic in Canada, Friday, January 15, 2021 in Ottawa. Tam says new information on COVID-19 and variants prompted the National Advisory Committee on Immunization to suddenly cancel its planned update on who should get the Oxford-AstraZeneca vaccine.THE CANADIAN PRESS/Adrian Wyld
AstraZeneca advice from national panel delayed by new data on COVID-19 and variants

OTTAWA — Canada’s chief public health officer says new information on COVID-19… Continue reading

Canadian Prime Minister Justin Trudeau looks at a television screen as he listens to United States President Joe Biden deliver a statement during a virtual joint statement following a virtual meeting in Ottawa, Tuesday, February 23, 2021. THE CANADIAN PRESS/Adrian Wyld
Trudeau pressured to adopt tougher emissions target for Biden climate summit

OTTAWA — Prime Minister Justin Trudeau is under pressure to step up… Continue reading

Passengers from Air India flight 187 from New Delhi wait for their transportation to quarantine after arriving at Pearson Airport in Toronto on Wednesday, April 21, 2021.THE CANADIAN PRESS/Frank Gunn
ICU pressures mount as COVID fells younger people; Ottawa mulls India travel ban

TORONTO — Amid mounting pressures on critical care in hospitals and concerns… Continue reading

Finance Minister Chrystia Freeland delivers the federal budget in the House of Commons as Prime Minister Justin Trudeau looks on in Ottawa on Monday April 19, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Three confidence votes to determine fate of minority Liberal government

OTTAWA — A pair of proposed changes to the federal budget put… Continue reading

Deputy Prime Minister and Minister of Finance Chrystia Freeland talks with parents during a virtual discussion on child care in Ottawa, Wednesday, April 21, 2021. Freeland is calling for patience and “flexibility” in response to questions about the government’s criteria for reopening the economy and border. THE CANADIAN PRESS/Sean Kilpatrick
Freeland urges patience as business looks for answers on reopening border, economy

OTTAWA — Deputy Prime Minister Chrystia Freeland is urging Canadian companies to… Continue reading

Most Read