Canadian oil and gas losing competitive edge due to industrial carbon

Leaders in Canada’s oil and gas sector say the industrial carbon levy would erode the country’s competitive edge at a time when the world is clamouring for a reliable energy supply.

“We’re still talking about an industrial carbon tax when no other producing and exporting nation does that to their producers,” Lisa Baiton, head of the Canadian Association of Petroleum Producers, said in an interview as the 2026 BMO CAPP Energy Symposium kicked off in Toronto on Tuesday.

Baiton said the war embroiling much of the Middle East has “put an exclamation point” on an argument CAPP has been making since Russia’s invasion of Ukraine in 2022: Canada is blessed with one of the biggest oil and gas reserves on the planet and has not only the opportunity, but the responsibility, to develop them and bolster global energy security.

“And yet we seem to be sometimes focusing on the wrong things,” Baiton said.

“Instead of seizing the moment and taking the mantle of that responsibility, we are focusing on things that add cost and make us less competitive.”

The conference is being held amid a push in Canada to more quickly build oil and gas export infrastructure to serve markets beyond what has traditionally been this country’s biggest customer, the United States.

The pipeline push

The Alberta government plans to file an application for a new West Coast crude oil pipeline this summer to the federal major projects office, which aims to speed along infrastructure deemed in the national interest.

The Alberta and federal governments signed a sweeping memorandum of understanding late last year on a host of energy matters, including a path toward building a new B.C. pipeline in tandem with an industrial carbon price that would support the economics of the massive Pathways carbon capture proposal.

Agreements on the nitty gritty of the carbon price and Pathways pieces remain unresolved two weeks past the April 1 deadline set out in the energy accord.

Under the MOU, Alberta’s industrial carbon price is to eventually reach $130 per tonne from $95. Premier Danielle Smith said late last month that talks were still ongoing around how quickly that price will rise.

A recent analysis from Clean Prosperity, a climate policy non-profit, suggested oilsands producers should be able to easily recoup the added carbon costs because their product would be able to sell for far more if a new pipeline enabled more exports to Asia.

It found net profits at four oilsands facilities it studied would increase by more than $3 billion in the 15 years following the opening of a new pipeline.

A separate analysis from the Canadian Climate Institute pegged the per-barrel hit from the increased carbon price at an average of 50 cents — about the cost of a Timbit.

A question of competition

But…