The memorandum of understanding (MOU) signed last week by the federal and Alberta governments could unlock more than $90 billion in low-carbon capital investment and slash over 70 megatonnes of annual emissions within the province.

Those are some of the key findings in Top TIER, a new research report released today by Clean Prosperity. The report is based on in-depth modelling of Alberta’s industrial economy, and consultation with experts, industry, and policymakers.

“Drafting the agreement was just the first step,” said Clean Prosperity President and CEO Michael Bernstein. “Now the federal and Alberta governments need to follow through on their commitments in order to deliver huge economic and climate benefits.”

“There are $90 billion worth of potential projects waiting to be unlocked through implementation of the MOU. That represents growth, jobs, and prosperity for Albertans and all Canadians.”

Michael Bernstein, president and CEO, Clean Prosperity

“There are $90 billion worth of potential projects waiting to be unlocked through implementation of the MOU. That represents growth, jobs, and prosperity for Albertans and all Canadians,” Bernstein said.

What Ottawa and Alberta need to do to unlock $90 billion in low-carbon investment

The report calls on the federal and Alberta governments to urgently finalize new rules for Alberta’s Technology Innovation and Emissions Reduction (TIER) carbon market — rules that will ensure a minimum effective carbon credit price of $130 per tonne, as specified in the MOU. High credit prices are necessary to incentivize low-carbon investment.   

In order to unlock massive investment and emissions reductions, Ottawa and Alberta also need to commit to a financial mechanism — also outlined in the MOU — to provide necessary certainty to industry that the governments will uphold strong carbon markets over the long term.

Clean Prosperity argues that this financial mechanism should take the form of broad-based carbon contracts for difference issued jointly by the federal and Alberta governments. 

Carbon contracts for difference guarantee the future value of carbon credits for low-carbon project proponents. They improve certainty about project revenues, reduce risk, and unlock capital investment. If governments uphold their commitments to strong carbon markets, the contracts need never be exercised, and so cost nothing to taxpayers.

“This MOU could herald a major turning point for low-carbon investment and climate action in Alberta and across Canada,” said Brendan Frank, the report’s co-author and Clean Prosperity’s director of policy and strategy. 

“Ottawa and Alberta must now realize the promise of the agreement to drive low-carbon growth and reduce emissions, by putting its provisions to work.”  

_{Photo credit: KORN V. from Quality Stock Arts}