Originally published in The Hill Times.

Canada is within reach of a historic “grand bargain” with Alberta on energy and climate that could define our economy for a generation. Yet at this critical moment, the oil sector is amping up its criticism of industrial carbon pricing as a drain on its competitiveness. 

This argument is outdated and frankly, lacks ambition. 

I understand why CEOs of oil companies would be arguing to reduce costs: their primary duty is to their shareholders. And I agree with the many Canadians who want to see our oil and gas sector thrive. As long as the world is consuming oil and gas, I’d like to see that energy come from Canada, a stable, democratic, and increasingly low-carbon producer. The oil and gas sector remains a massive engine for the Canadian economy and an invaluable geopolitical asset. 

But growing the oil and gas sector should not come at the expense of our climate goals. Instead, we ought to be bold enough to chase both.

“Growing the oil and gas sector should not come at the expense of our climate goals. Instead, we ought to be bold enough to chase both.”

Michael Bernstein, President and CEO, Clean Prosperity

The federal-Alberta memorandum of understanding gives us the roadmap to this vision of the future. It commits to building a new pipeline to the West Coast while strengthening industrial carbon pricing. 

This is a clear win for the oil sector. Research by my organization, Clean Prosperity, finds that the financial benefits of a new pipeline would vastly outweigh any increase in the carbon price. The result would be billions of dollars in new profits for the oil sector.

Beyond bottom lines, a new pipeline would increase public revenues, enhance energy security for Canada and its allies, and diversify our energy exports, helping us hedge against the capriciousness of our largest trading partner.

The oil and gas industry also argues that carbon pricing is an impediment to attracting new capital. But eliminating carbon pricing would be like canceling your gym membership because you’re trying to reduce your household budget; you might save a few dollars today, but at the expense of your long-term health. There are better ways to close any competitiveness gaps. 

After all, Canada already has real competitive strengths — political stability, abundant reserves, and lower break-even costs than U.S. shale producers. In fact, U.S. capital has already been pouring into the oilsands over the last year. 

But if we need another boost, there’s plenty of ways to do this that don’t involve abandoning our most effective climate policy. The revenue from carbon pricing could even help fund competitiveness enhancers like a corporate income tax cut.  

Not to mention that carbon pricing is already attracting investment in decarbonization. Alberta alone has already seen billions worth of investment and thousands of jobs. Strengthened carbon markets could unlock $90 billion worth of low-carbon investment in the province by 2040, while serving as a key part of the business case for attracting capital into new low-carbon sectors — from renewable electricity to carbon dioxide removal — that will help drive the future economy.

“Carbon pricing is already attracting investment in decarbonization. Alberta alone has already seen billions worth of investment and thousands of jobs.”

Michael Bernstein, President and CEO, Clean Prosperity

Canada is at a pivot point. The choices our leaders make in the coming months will dictate our economic trajectory for decades to come. We do not have to choose between doubling down on our traditional strengths, such as the oil sector, and securing the massive capital flows required for a low-carbon future. Well-designed industrial carbon pricing ensures Canada can live up to its potential as a diversified energy powerhouse.

The “grand bargain” is within reach. Let’s not let a lack of ambition stop us from crossing the finish line. 

_{Photo credit: NRCan}