Alberta suggests an agreement on carbon pricing and on the Pathways project is unlikely to materialize before the April 1 deadlines set out in its Memorandum of Understanding (MOU) with Ottawa last fall.

A statement from Premier Danielle Smith’s office says “there is still more work to do” on these pieces, “as Alberta is committed to agreements that protect affordability for Albertans and enhance competitiveness for industry.” 

In the MOU, Ottawa and the province agreed to work together to ramp up the minimum effective credit price of carbon to $130 per tonne. They also agreed to find a way forward for Pathways, an ambitious but dormant carbon capture project spearheaded by Canada’s major oil sands producers. 

The April 1 deadline also applies to agreements on impact assessments and methane. For the former, a deal was reached in early March; for the latter, an agreement will be announced very soon, according to Smith’s office. 

“We will continue to do our best to meet the April 1 deadline for all or most of these four milestone agreements, and continue to prepare our government’s west coast pipeline application for submission by June,” reads the statement. 

READ MORE: Clock ticking on Alberta-Ottawa carbon pricing deal as cracks begin to show

Some in the oil and gas sector previously voiced support for strong and consistent carbon pricing policies, but the tone shifted earlier this year. 

Industry players like the Canadian Association of Petroleum Producers say higher costs for carbon directly reduce Canada’s competitiveness as other jurisdictions “bear little to no burden for carbon compliance.”

This is especially true in the U.S., where the Trump administration is aggressively pursuing deregulation of the oil and gas sector. 

The carbon pricing agreement would spell out how Alberta will bring its effective carbon price to $130 per tonne when carbon credits currently trade in the market for about $30. 

Alberta’s carbon market is extremely sensitive to policy announcements, and the province’s promise to bring up the price last fall was enough to raise prices in the months that followed, with a rally reaching $40 per tonne in January. 

But as Bloomberg reports, that rally has since faded, with prices plummeting back to the $30 mark and seriously undermining the economics of the $16 billion Pathways project. 

That project aims to capture CO2 emissions through a transportation network and storage hub, reducing the emissions intensity of oil sands producers. 

The six companies behind the project have long stated they would only move ahead upon “obtaining sufficient fiscal and policy supports” from governments. 

Alberta and Ottawa are proposing to pitch in via carbon capture tax credits; some estimate these could cover two-thirds of the project’s capital requirements. 

For the remainder, Pathways companies may seek assurances against potential future changes to government policy via carbon contracts for difference and other financial guarantees before making a final investment decision. 

The MOU also states that the Canada Indigenous Loan Guarantee Corporation could help backstop Indigenous ownership stakes in a new bitumen pipeline and in Pathways, “if appropriate.”

One of the companies behind Pathways, Cenovus Energy, argues it should be able to use carbon compliance fees to offset costs of building and operating carbon reduction projects. 

Construction on the first phase of Pathways must be underway for construction to begin on any new bitumen pipeline to Asian markets, according to the MOU.