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Data Show Stronger Industrial Carbon Pricing Would Cost Oil Sands Producers Just a Timbit A Barrel in 2030 on Average

Wednesday, 11 March 2026 10:28.AM

- Canadian Climate Institute analysis finds oil sands producers would see minimal costs from strengthening industrial carbon markets in line with the Canada-Alberta MOU--just a Timbit per barrel of oil by 2030 at a credit price of $130 a tonne. -

Strengthening industrial carbon markets to meet the terms of the Canada-Alberta Memorandum of Understanding (MOU) would have minimal cost impact on the oil sands sector's bottom line, according to new research from the Canadian Climate Institute.

Specifically, the Institute's latest analysis of project-by-project compliance costs and profits found that oil sands producers would pay on average less than 50 cents a barrel in 2030, up from 9 cents a barrel today, if the minimum price of carbon credits rose to $130 a tonne by the end of the decade. That's roughly equivalent to the cost of a Timbit, after accounting for inflation.

The Institute's 440 Megatonnes project released a new cost calculator that allows users to explore the costs or benefits that specific oil sands projects are estimated to face under current and future industrial carbon prices. It shows that the cost of industrial carbon pricing today represents less than 1 per cent of the value of a barrel of oil--0.5 per cent of the price of Western Canadian Select at C$100 per barrel.

The new research comes in the wake of recent public comments and media reports stating that industrial carbon pricing hurts the competitiveness of Canada's oil and gas sector--which is not supported by evidence.

On the contrary, carbon pricing protects competitiveness by design. Programs such as Alberta's Technology Innovation and Emissions Reduction (TIER) system rely on emissions thresholds that limit costs for trade-exposed industries while still encouraging emissions reductions. Firms only pay the carbon price on the portion of emissions that exceed a performance benchmark, and can make money if their emissions are below that mark by selling carbon credits on the market or banking them for future use.

The Climate Institute also examined nearly two decades of data to assess how industrial carbon pricing has impacted the competitiveness of oil sands facilities. The analysis found no statistically significant evidence of export contraction linked to carbon pricing using 17 years of provincial trade data covering 10 provinces and 19 industrial sectors, and after accounting for commodity cycles and U.S. demand, oil prices, and provincial trends. The average estimated effect was essentially zero.

Industrial carbon pricing is the most important climate policy in Canada to reduce emissions, drive innovation, and maintain economic competitiveness, all while costing consumers next to nothing. Maintaining the planned trajectory to $130 per tonne for minimum carbon credit prices by 2030 will provide long-term certainty to the business community and help reduce carbon pollution across diverse industries.

"The evidence shows stronger industrial carbon pricing will cost oil sands companies just a Timbit a barrel by the end of the decade. It's unclear how any project could claim to be uneconomical as a result of such a negligible cost--especially considering it makes up less than one per cent of the cost of a barrel of oil. Alberta and Canada have committed to strengthen industrial carbon markets; closing loopholes and raising the price of carbon credits are non-negotiable if this important policy aims to reduce emissions, while keeping costs low for industry."
-- Rick Smith, President, Canadian Climate Institute

SOURCE: Canadian Climate Institute

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