katiindies / Depositphotos.com
CALGARY — A new report from the Fraser Institute claims industrial carbon taxes and mandatory carbon capture requirements are making Alberta’s energy sector less competitive with major U.S. producers.
The report argues Alberta’s industrial carbon pricing system, combined with carbon capture, utilization and sequestration requirements agreed to by the Alberta and federal governments, will significantly increase the cost of producing oil, natural gas and electricity over the next 15 years.
The study was authored by Jack M. Mintz, a fellow at the University of Calgary School of Public Policy.
According to the report, Alberta’s industrial carbon tax is expected to reach $140 per tonne by 2040 under the current agreement between Ottawa and Alberta.
The Fraser Institute estimates the cost of producing a barrel of conventional oil would increase from US$43 to US$54 by 2040, while oil sands production would rise from US$51 to US$61 per barrel.
Natural gas production costs would increase from C$1.56 to C$2.17 per gigajoule, while electricity generation costs would climb from C$39 to C$53 per megawatt hour.
The report argues those additional costs do not apply to competing energy-producing states such as Texas and New Mexico, potentially making Alberta less attractive for investment.
Mintz said higher production costs could encourage investors to direct capital toward jurisdictions with lower regulatory costs and potentially higher returns.
The report also argues higher electricity generation costs could ripple through Alberta’s broader economy by increasing operating expenses for businesses that rely on affordable power.
The Fraser Institute describes itself as an independent, non-partisan public policy think tank. Its report presents an economic analysis of Alberta’s industrial carbon pricing framework and carbon capture requirements but does not examine potential environmental benefits associated with reducing greenhouse gas emissions.
Comments