Author of the article: The Canadian Press My Rampson Date of publication: March 30, 2022 • 2 hours ago • 3 minutes reading • 144 Comments Federal Environment Minister Steven Guilbeault calls coal pricing a “cornerstone” of Canada’s climate action plan. Photo by Jennifer Gauthier / Reuters / File
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OTAWA – The federal government is trying to “prove in the future” the price of coal in exchange for political decisions to cancel or reduce it.
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This could include legislation to regulate the price of coal and its upward trajectory. Or it could mean signing contracts with investors who guarantee compensation if the price of coal does not rise as promised, negatively affecting their investment. The promise is made in the new emission reduction report submitted on Tuesday by Environment Minister Steven Gilbol, who says coal pricing is the “cornerstone” of Canada’s climate action plan. Pollution, including greenhouse gas emissions, has social costs, and carbon pricing is a method of applying that cost to the individual or entity that emits it. It also makes investing in technology that reduces emissions more attractive than the current situation.
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But that impact is diminished if there is no certainty that the price of coal will be as promised. Guilbeault said in an interview that he has heard from several private sector investors that they are cutting funding for emissions reduction projects because the incentive to invest is based on a carbon price that is politically fragile. “They say we need certainty because we are making important investment decisions based on coal pricing and what will happen if in a year or three from now there is a new government and suddenly, it no longer exists,” he said. . “Well, this is really a response from the federal government to the investor and private sector community who say we’re listening to you. “And we’re in the process of looking at ways in which we can basically prove future coal pricing in Canada.”
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Michael Bernstein, executive director of Clean Prosperity on climate policy, says investors are not spending their money on climate action as much as they should, adding that legislative confidence in the price of coal is one of the most important things in the new emission plan. He used carbon sequestration and storage as an example, saying it generally costs less than $ 110 per tonne of emissions collected for the facility. The current national price on pollution increases by $ 10 to $ 50 per tonne of emissions on April 1, but will increase by $ 15 per year by 2030, when it reaches $ 170. “So if you have industrial emitters who are facing a carbon price of $ 170 per tonne by 2030, they will of course have an incentive to pay for carbon capture, which is less expensive, and avoid paying the carbon price,” he said. . . “Therefore, it gives them the financial incentive to make these investments. “They can show their investors and their board that this will be a cost-effective way to make those investments.”
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Coal pricing has been a political football in Canada for more than a decade and has played a role in every federal election and in many provincial elections, at least since 2008. Coal pricing was also vulnerable to change of government. Ontario’s cap-and-trade system was abolished in 2018 following the ouster of Doug Ford’s Progressive Conservative government. A year later, Prime Minister Jason Kenney wiped out the coal price imposed by the Rachel Notley government in Alberta in 2017. Since 2019 the federal government has imposed its national system on any province without comparable provincial value, including Alberta, Ontario, Manitoba and Saskatchewan. Federal Conservatives have repeatedly promised to kill the price of coal. The ousted Tory leader Erin O’Toole had proposed a small coal pricing program, sparking anger and becoming one of the reasons he was expelled from his parliamentary group in January.
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Several candidates seeking to replace him also promise to repeal, or at least adapt, the national system. Marty Reed, founder of Vancouver-based business firm Evok Innovations, said “consistent, predictable pricing” is critical for investors in things like carbon capture and storage. “Without this confidence, investors will simply not be able to make the kind of commitments needed to create the multibillion-dollar capital projects,” he said. Sarah Petrevan, director of sustainability at the Cement Association of Canada, said uncertainty about coal pricing is a “significant issue” for cement companies, which share emissions reductions. It is not the only obstacle to investment, Petrevan said. Policies to increase demand for clean zero cement are also critical, he said. But emission reduction projects are time-consuming and costly, and anything the government can do to ensure that the price of coal leading to these investments will continue to exist when the projects are completed, he said. “Businesses thrive with certainty.”
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