Let’s take each of these in turn:

1. Fact: Industrial carbon pricing in Canada is not only low cost, in many cases companies can actually make money if they’re doing a good job reducing their emissions. 

Fiction: Industrial carbon pricing is unaffordable for industry.

That last statement is not in any way supported by actual evidence. Don’t take my word for it though—the precise amount that specific oil sands facilities are paying is calculated and online. On average, the effects of reaching a $130 per tonne effective carbon price (which is stipulated in the Alberta MOU) by 2030 for Alberta's oil sands producers would be less than 50 cents a barrel—equivalent to a Timbit —up from 9 cents a barrel today. 

There's also no evidence that the current industrial carbon pricing system has affected industry's competitiveness—it's explicitly been designed not to, while creating an incentive for emissions reductions. The Climate Institute analyzed 17 years of provincial trade data covering 10 provinces and 19 industrial sectors, and after accounting for commodity cycles and U.S. demand, oil prices, and provincial trends, we found no statistically significant evidence of export contraction linked to carbon pricing; the average estimated effect was indistinguishable from zero. 

If someone is telling you that the compliance costs of industrial carbon pricing for oil sands firms are unmanageable, they are either trying to mislead or don’t understand how industrial carbon pricing works. 

2. Fact: An improved industrial carbon pricing system will open up trade opportunities for Canada.

Fiction: Fixing industrial carbon pricing will prevent Canadian companies from taking advantage of current opportunities.

1. Again, that last statement does not line up with what’s actually happening in the world. 

   As prospects for new trade emerge from the conflict in the Strait of Hormuz, it is simply not credible to argue that a cost increase of dimes per barrel from industrial carbon pricing would price Alberta oil out of the market, given profits are being counted in the tens of dollars per barrel. Some back-of-the-envelope calculations: a sustained $60 per barrel increase (as we've seen more or less since the conflict with Iran began) translates to $110 billion a year in additional revenue for the sector. Stats Canada calculates the oil and gas industry's average profits at 50 per cent, which roughly translates to $55 billion in profits if this current windfall persists for a year. Incidentally, this is also about five times the total cost of the proposed Pathways carbon capture project.

   Industrial carbon pricing systems are becoming more, not less, common around the world. Over the past decade, the number of systems operating globally have more than doubled. Carbon pricing covered around 12 per cent of annual global greenhouse gas (GHG) emissions in 2015. As of today, these mechanisms cover nearly 30 per cent of global GHG emissions. 

   One reason this is occurring is that major jurisdictions, such as the EU and the U.K., not only have their own industrial carbon pricing systems, but they have erected carbon border tariffs to penalize trading partners with industrial carbon pricing systems that are deemed substandard. So the creation of cohesive and effective national systems of carbon pricing is now literally the price of admission for global trade.

    

   3 .Fact: Yes, other oil-producing countries currently have carbon pricing systems in place and additional policies to reduce their emissions and keep their industry competitive.

   Fiction: Other oil-producing countries don’t have carbon pricing systems, so why should Canada?

As I mentioned earlier, industrial carbon pricing is becoming more common around the globe, and that includes oil-producing nations such as the U.K. and Norway, each of which apply a much more stringent carbon price than we currently have in Canada. In other major oil-producing countries such as Saudi Arabia, the government and industry are spending huge sums to reduce emissions per barrel. So Alberta and Canada are not outliers. Indeed, when it comes to industrial carbon pricing we have some catching up to do. 

The stakes are high and they are clear. Canadian Climate Institute modelling indicates that a stronger industrial carbon market in Alberta would have a major impact on emissions outcomes. It’s not an exaggeration to say that the difference between an effective MOU deal and an ineffective one is make or break for Canada’s trajectory to net zero by 2050.

When making important decisions in life, it’s critical to base them on fact rather than fiction. In the life of our country, the final details of the MOU are one of those moments.

Rick Smith is President of the Canadian Climate Institute

The views expressed are those of the author(s). National Newswatch Inc. publishes a range of perspectives and does not necessarily endorse the opinions presented.