‘We haven’t seen the end of carbon pricing’: Will the Carney-Smith pipeline deal help or hurt Canada’s emission targets?

Christopher Ragan, economics professor at McGill’s Max Bell School of Public Policy, examines how well the Alberta-Ottawa memorandum of understanding balances pipeline development with environmental protection. He analyzes whether the deal—featuring carbon capture investment, enhanced industrial carbon pricing, and a new pipeline to Asian markets—will help or hinder Canada’s emission targets. You can listen to this episode on Amazon, Apple, and Spotify. Program Summary This is an automated summary. Please check against delivery. Canada’s approach to energy policy is undergoing a significant shift as the federal government attempts to balance economic development with environmental commitments. Recent policy discussions have centered on a framework that seeks to advance both oil sector growth and emissions reduction initiatives simultaneously. The emerging policy direction includes plans for new pipeline infrastructure to expand oil exports to Asian markets, coupled with major investments in carbon capture and storage technology. This dual approach represents an attempt to maintain Canada’s position as an energy producer while addressing climate concerns. The strategy also involves strengthening Alberta’s industrial carbon pricing system to create more effective emissions reduction incentives across the province’s industrial sector. This balanced approach has generated debate about whether such policies can successfully achieve both economic and environmental objectives. The framework aims to reduce the emissions intensity of oil production through carbon capture technology while simultaneously increasing export capacity. Enhanced industrial carbon pricing mechanisms are intended to drive emissions reductions across multiple sectors, including electricity generation. The policy shift involves repealing certain existing regulations, including emissions caps on the oil and gas sector and clean electricity regulations in Alberta. These changes reflect a recalibration of how Canada pursues its climate targets, moving away from some regulatory approaches in favor of market-based mechanisms. The effectiveness of this transition remains uncertain, as outcomes will depend on how well new systems are designed and implemented. Questions persist about whether these policies will help or hinder Canada’s ability to meet its 2030 climate targets. The elimination of consumer carbon pricing has already altered the policy landscape, removing direct price signals for households and small businesses that account for a substantial portion of national emissions. Industrial carbon pricing alone may not provide sufficient coverage to achieve ambitious emissions reduction goals. The challenge of meeting long-term climate commitments extends beyond immediate policy changes. Achieving net-zero emissions by 2050 requires sustained effort across decades, with numerous variables that remain difficult to predict. The path forward involves uncertainty about how much new oil production will result from expanded pipeline capacity, how effectively carbon capture technology will perform, and whether strengthened industrial pricing systems will deliver anticipated emissions reductions. International climate commitments add complexity to domestic policy decisions. While global consensus supports dramatic emissions reductions to avoid severe climate impacts, the distribution of effort among nations remains contentious. Countries face political difficulties when advocating for global action while seeking different domestic trajectories. This tension shapes how nations like Canada structure their climate policies and economic development strategies. The debate over exporting liquefied natural gas illustrates these complexities. Proponents argue that Canadian exports could displace coal-fired power generation in Asian markets, potentially reducing global emissions despite increased domestic production. However, this outcome depends on market dynamics and what energy sources Canadian exports would actually replace in importing countries.