Alberta's industrial policies will be key in path towards net-zero emissions, report says

As the largest contributor to Canada’s greenhouse gas emissions, Alberta’s industrial strategy will play a crucial role in helping the country achieve its 2030 and 2050 Paris emissions targets, says a new report from the Business Council of Alberta.

The report, From Outsized Emissions to Outsized Opportunities: Policies to Support an Alberta Low-Carbon Industrial Strategy, outlines 50 policy recommendations to the provincial and federal governments. The paper was developed by Alberta business and Indigenous leaders through the council’s energy and environment committee and stakeholder input.

“The reality is Alberta is the largest contributor to Canada's emissions profile. We recognize that and we want to be the place of solutions,” Adam Legge, president of the council, said in an interview with Research Money.

“If we are going to achieve our net zero targets, or Paris targets, anything that Canada does as a nation to try and reduce its emission profile has to be heavily concentrated in Alberta.”

The report outlines a plan to significantly reduce domestic and global emissions, create new technology for Canada to export globally, and build a sustainable low-carbon economy. “Canada’s pathway to net zero runs through Alberta,” it says.

It notes that while the province’s resource-dominated economy has created significant wealth for all Canadians, it also has resulted in disproportionately higher emissions than in other provinces. Alberta’s industrial and agriculture sectors account for 29 per cent of Canada’s total emissions.

The report recommends that the federal government “allocate federal dollars in proportion to where they are needed,” focusing its support for consumers and businesses on provinces such as those that will see outsized cost impacts from energy transition.

Decarbonizing Alberta’s key sectors, though, will be costly and while as much as possible this should come from the private sector, hard-to-decarbonize industries face challenges in obtaining capital, according to the report.

It recommends that the federal government create a significant pool of capital available through the Canada Infrastructure Bank to provide sizeable loans to private businesses looking to fund major decarbonization projects in Alberta’s industrial sector.

“The loan repayment terms would, in effect, shift the risks on a project’s return on investment posed by future changes to the carbon price trajectory from the loan’s recipient to the government through a contract of differences,” says the report.

Given Canada’s tight timeline to reach GHG targets by 2030, the report says accelerated federal government action also is needed on carbon capture, utilization and storage, which it says is not a value-creating proposition today.

Another recommendation calls for Ottawa in partnership with the provinces to commit a large pool of grant money for building the carbon transportation infrastructure needed to create industrial sector-wide carbon capture benefits. Funded under Ottawa’s CCUS strategy, that amount should be “significantly larger” than the $8 billion Net Zero Accelerator Initiative fund announced in 2020 to invest in projects to decarbonize large emitters and enable industrial transformations, says the report.

The report also points to the need for strong domestic and international carbon offset markets. The Alberta government, it says, should align its carbon pricing with the federal government’s and agree to an escalator going forward.

Ottawa, meanwhile, should work with the provinces to develop mutual recognition standards that allow companies in one province to use carbon offsets and performance credits from any other provincial trading scheme to meet GHG reduction obligations, the report says.

Internationally, the federal government along with the Alberta government and sector stakeholders, should work with key allies to establish and operationalize international carbon offset markets, the report recommends.

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