Canadian producers and opposition call for carbon pricing system to be scrapped
A group of Canadian oil and gas companies, together with political opposition figures, called last week for the federal carbon emissions pricing system to be scrapped. The system is similar to the European emissions trading system. Critics argue that the carbon tax harms the competitiveness of Canadian businesses and puts them at a disadvantage compared with countries without similar measures, such as the United States. Supporters, by contrast, argue that it is crucial for maintaining trade ties with environmentally progressive partners.
A total of 14 oil and gas company executives, including political opposition leaders, called last week for the carbon emissions pricing system to be scrapped. It has been in place in the country since 2019. As in the European Union, where emissions allowances are used, the system is primarily aimed at reducing pollution from the energy and heavy industry sectors. The letter's signatories argue that the national system puts Canada at a competitive disadvantage compared with jurisdictions without similar regulations, such as the United States.
The move can be seen as a response to the forceful start to US President Donald Trump's term in office. The threat of US tariffs is prompting companies to seek new markets for energy resources. This has strengthened voices in Canada arguing that the country is prioritizing its climate goals at the expense of the economy.
One prominent proponent of this view is Conservative leader Pierre Poilievre, who has made the federal carbon pricing system a key topic of political debate. Poilievre has pledged to scrap the system if he wins the election. Canada's election is due to take place at the end of April this year.
Newly appointed Liberal Prime Minister Mark Carney, by contrast, told reporters on Tuesday that Canada needs an industrial carbon pricing system if it wants to increase trade with its allies. Britain, for example, has announced plans to introduce a carbon tax and create regulations for imports from countries with less stringent climate rules.
In 2022, Canadian CO2 emissions from fossil fuels totalled approximately 582 million tonnes, accounting for about 1.53% of global emissions. This ranks Canada among the world's 10 largest CO2 emitters. On the other hand, the country has extensive forests and other vegetation that absorb carbon.
Opposition calls for a change in approach, not an end to regulation
Poilievre is not, however, calling for climate and environmental protection measures to be eliminated altogether. He said he would scrap the federal rules and replace them with expanded federal incentives, such as tax breaks, that would continue to encourage companies to reduce pollution. Decisions on carbon pricing would then be left to individual provinces.
In their open letter, the 14 Canadian CEOs of oil and gas companies said the federal scheme should be scrapped so that provincial governments could “set more appropriate carbon regulations”.
Under current laws, industrial facilities that exceed their permitted emissions limits must either pay the government or buy carbon credits to offset their environmental impact. Like the European emissions trading system, Canada's system is designed to become stricter over time.
Many provinces, including Alberta, known for its vast oil sands deposits, already have their own carbon emissions pricing systems. Under current rules, however, provincial systems must be at least as strict as the federal one.
Status quo is holding back decarbonization projects
Current uncertainty over government policy is creating significant uncertainty for large industrial companies, with a direct impact on investment in decarbonization projects. Criticism has come, for example, from a group of Canada's six largest oil producers, known as the Pathways Alliance.
The group is working on a C$16 billion (US$11.47 billion) carbon capture and storage project that is intended to significantly reduce industrial greenhouse gas emissions. The project has now stalled, however, and its future is uncertain.
“Until there is clarity on the future of policy... it is unlikely that investments in Pathways will go ahead,”said Michael Bernstein, CEO of the Clean Prosperity think tank.
Pathways has also highlighted on its website the need for federal policy that “expands Canada's oil sands” and called for the removal of the “uncompetitive carbon emissions pricing system”.
Translation disclaimer
This article is a machine translation of the Czech original and has not yet been fully reviewed. In case of any doubt, please refer to the Czech version.
