The recent Alberta–Canada memorandum of understanding (MOU) on industrial carbon pricing has generated both optimism and concern. Some view it as an important step toward reconciling economic growth with emissions reduction, while others remain skeptical.

Portions of Alberta’s energy sector, particularly the oilsands industry, are concerned that industrial carbon pricing could undermine competitiveness unless the other components of the MOU — including carbon capture, utilization and storage (CCUS), active carbon-credit markets, and supporting regulatory and financial frameworks — operate in an integrated and efficient manner. CCUS involves capturing carbon dioxide from industrial processes and either using it in commercial applications or permanently storing it in deep geological formations.

If a CCUS project captures and permanently stores a tonne of carbon dioxide, an industrial producer could pay a CCUS provider to remove that tonne from its emissions footprint. If the resulting carbon credit has a market value close to the carbon price, the credit can effectively fund the carbon removal service. In this way, the carbon market becomes more than a compliance mechanism; it becomes a financing mechanism for emissions reductions.

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