By announcing a hefty price on carbon, Prime Minister Justin Trudeau seems to be moving closer to finally approving an oil export pipeline.
But he is also creating a new problem: His targeted minimum price on carbon emissions is so high, how it will be implemented so unclear, he’s replacing pipeline uncertainty with carbon price uncertainty — hardly the recipe to restore investor confidence in beaten down Canadian oil and gas.
“We already have a highly uncertain policy environment in Canada now, here in Alberta especially with the NDP changes that have come so fast and furious it’s almost historically unrecognizable, and this is yet another dose of uncertainty in an uncertain investment climate,” said Kenneth Green, Calgary-based senior director of natural resource studies at the Fraser Institute.
Indeed, many will be wondering whether the $50 a tonne carbon price by 2022 announced by the Prime Minister Monday, which is sure to increase the cost of producing oil in Canada along with everything else in the economy, will erode the benefit of the bump in oil prices expected from increased pipeline capacity.
“Life just became more expensive in Canada, all businesses became more uncompetitive, and yet we have no accountability for the use of funds,” warned Jeff Tonken, president and CEO of Birchcliff Energy Ltd. “Eventually the economy will break.”
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