TORONTO — Rachel Doran, executive director at Clean Energy Canada, made the following statement in response to the Implementation Agreement for the Canada-Alberta MOU:
“The long-awaited agreement between the federal government and Alberta was promised to strengthen Canada’s competitiveness and the effectiveness of key climate policies—but is, in reality, a step backward. This is true not only when it comes to reducing climate-change-causing emissions from big industry, but also on the aspiration laid out yesterday to double Canada’s electricity grid as the economic backbone of our future.
“Indeed, the federal government’s goal of a net-zero grid by 2050 may be fundamentally at odds with the details in this MOU. Alberta, once the Canadian capital of renewable investment, has not made any concrete commitments to unleash its once-booming free market. It has, conversely, secured a commitment that natural gas generation will be expanded and is likewise not dropping its legal challenge against Canada’s Clean Electricity Regulations. Furthermore, the federal government’s suggestion that the regulations will be ‘in abeyance’ until after all court cases have been finalized—a process that may take years—will create significant investment uncertainty.
“Alberta policy changes have already undermined tens of billions in renewable energy investments in the province. Despite leading the country in wind, solar, and energy storage deployment early this decade, private investment in renewables has fallen by nearly 99% since 2023 due to changes introduced by Premier Smith’s government.
“On the Clean Electricity Regulations, Alberta has agreed only to negotiate an equivalency agreement if courts uphold the policy’s constitutionality. If Alberta does not negotiate in good faith and the agreement has no teeth to prevent future debate, the result could be a provincial race to the bottom, leaving Canada’s vision of a competitive, unified electricity grid back where it started: fragmented and increasingly failing to realize its potential.
“And while the government’s press release and implementation agreement suggest that Alberta will make changes to its Restructured Energy Market to facilitate more investment in renewables, the MOU makes a far weaker commitment: that changes will only be considered if warranted.
“None of this adds up to meeting the vision laid out by the federal government only yesterday to double Canada’s relatively clean electricity grid as a way to electrify industry and Canadian homes: an essential play both for the future of our economy and household affordability.
“The agreement similarly falls short in delivering on effective industrial carbon pricing, which modelling by the Canadian Climate Institute found to be doing the most heavy lifting toward our climate targets. While changes to Canada’s industrial carbon pricing system were meant to strengthen the actual impact of the policy, if not the optics of it, the dials here are turned too low to result in the better outcome that was promised.
“The agreement makes an attempt to ensure the real carbon price that companies pay comes closer to the so-called ‘headline price,’ and yes, setting a carbon price floor is a good idea, as is signing contracts for difference to ensure governments stick to their promises for an effective carbon price. But when it comes to the actual numbers needed to empower these changes, the agreement offers too little, too late.
“An industrial carbon price serves as an incentive for companies to invest in cleaner methods of production. If increasing this price to meaningful levels is pushed down the road, then so will be any related investments. Industrial carbon pricing is tied to over 70 major projects worth more than $57 billion. And this does not just affect Alberta. By striking this deal with one province, the federal government has potentially opened the floodgates for a lowering of ambition across all provincial industrial carbon pricing systems, affecting the incentives for steel mills in Ontario, potash mines in Saskatchewan, and cement plants in B.C.
“Canada is falling out of step with key trading partners in the transition to a global clean energy economy. Whereas the agreement aims for an effective carbon price of $130 by 2040, the European Union carbon price is close to that amount already today. And while the agreement sets tightening rates of 2% or lower, the EU has set rates of over 4% every year.
“The EU knows where it needs to go, launching a comprehensive set of new measures—including electricity tax cuts and investments in renewables—that cement clean energy as the path to energy security. EV sales are unsurprisingly skyrocketing globally, including here in Canada: March EV sales were up 75% year-over-year.
“More than 40 countries are currently rationing energy, and it’s no wonder. As International Energy Agency head Fatih Birol put it, ‘the damage is done…. There will be a significant boost to renewables and nuclear power and a further shift towards a more electrified future,’ adding that ‘this will cut into the main markets for oil.’
“In other words, the same forces driving up oil prices today are destroying the fossil fuel demand of tomorrow. This government has suggested that it’s making certain short-term concessions while keeping its eye firmly on building for the future. But the reality is that, once again, Alberta is making promises while the federal government is making commitments. Canadians need policies that strike a better balance.”