The minute
- A C.D. Howe Institute study by economist G. Kent Fellows measured the impact of Alberta’s TIER (Technology Innovation and Emissions Reduction) system on oil sands production costs
- Carbon pricing added an average of C$0.70 per barrel to marginal production costs in 2023; on a production-weighted basis, the effect drops to just C$0.34 per barrel
- Some major projects actually saw a net benefit from the system, with the range across facilities spanning from a C$1.09 cost reduction to a C$4.05 increase per barrel
Why it matters
The TIER’s benchmark-based system works differently from the “headline” carbon price, and that difference is exactly what tends to disappear from public debate whenever the oil industry complains about high carbon costs.
This holds even with plans to raise TIER’s benchmark price from C$95 per tonne in 2026 to C$140 per tonne in 2040, and the study projects most oil sands facilities will stay below C$5 per barrel in carbon costs through 2050 under the new Canada-Alberta agreement. via Carbon Credits
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