Cabot Canada has been making carbon black, a chemist powder used mainly to reinforce rubber, in Sarnia, Ontario, for 72 years.
A lot of energy is needed, in the form of natural gas burning, and that means that the company has had to pay For its carbon emissions, under the rules of fixing of industrial carbon prices in Canada.
This week, they won a subsidy of $ 5.6 million from the federal government to install new equipment that would cut their carbon footprint.
The money comes from a fund created from the product of the industrial carbon pricing system, which puts a price on carbon emissions from the main industries. (In Ontario, the program began as an operation administered by the federal government, then changed in 2022 to the pricing system administrated by the province of Ontario that works similarly).
“We are very happy to see that they have these available financing programs,” said Dean Pearson, president and general manager of the Cabot Canada installation, who will use the money in new technology to reuse the thermal energy produced in their manufacturing process. Recycled energy will be used to heat its buildings and facilities, reducing the use of plant gas.
Together with Cabot, the Federal Government Announced financing For a variety of projects this week from $ 662,000 to modernize a dryer in McCain Foods in Carberry, Man., A $ 25 million for red sugar in Toronto to reduce the use of energy at its sugar refining plant.
It is a snapshot of what could be at risk if the industrial carbon price was canceled, something that the conservatives of Pierre Poilievre have promised to do at the federal level in the campaign. The announcement of last week attracted the concerns of climatic policy experts that concern how uncertainty will affect companies throughout Canada.
Companies can make money with carbon prices
The price of industrial carbon has been a key part of the liberal government plan to address climate change, giving economic incentives to reduce emissions, both carrots and stick.
Large -scale emitters have thresholds over carbon intensive can be their operations. Those who exceed it have to pay. Those who produce less carbon pollution that can be obtained by gains by having surplus credits to sell.
Currently, the Federal Government directly manages the price system in Manitoba, Prince Eduardo, Nunavut and Yukon. All other provinces manage their own programs, but must comply with federal standards on the price that is put in companies and how money is used.
An independent analysis last year found the most effective part of government policies to reduce emissions in Canada, and industrial voices supported it publicly, until recently.
Conservatives say they would eliminate the federal requirement, leaving the provinces to administer their own price systems if they wish, and expand federal tax credits aimed at clean technology and manufacturing.
Mark Carney, the liberal leader, has said that he would maintain and improve the carbon industrial price system, but has not detailed any change proposed to him.
From Poilievre’s announcement, Saskatchewan Premier Scott Moe announced On Thursday that will stop the industrial carbon price system of its province on April 1.
Meanwhile, Alberta Premier, Danielle Smith, welcome Pailievre’s announcement to eliminate federal government role in carbon prices. But many expect Alberta to maintain their own system, which has been in force since 2007.
“There is money at the table that has been invested that is at risk,” said Dave Sawyer, the main economist of Canadian Climate Institute.
“We are listening to investors who are really worried that they have to cancel some significant assets or obtain significantly lower performance of their investment they have made in case these systems disappear.”
Sawyer referred to the “carrot” part of the carbon industrial price system, where companies can generate carbon credits in exchange for reducing their emissions. These credits can be sold, with profits, to other more polluting companies that must compensate for some of their emissions.
What does all this uncertainty mean to investment?
The Canadian Climate Institute now estimates These 70 issuance reduction projects throughout Canada, with a value of more than $ 57 billion, are linked to the price of carbon.
“You can see that those who have moved early, using new technologies, testing new technologies, implementing new technologies, have become winners in these carbon markets,” said Michael Berends, CEO of Clearblue Markets, a company that advises companies on how to navigate in carbon price systems in Canada.
Berends says that the Ontario pricing system is attractive to multinational companies to bring their investments to the province, because they know they can access the money they pay to the system in future years. Without that certainty, he says that these companies would prefer to invest in another place.
“We have said that a client says that we decided to invest in our Quebec plant instead of the Ontario plant because the price of carbon was more stable and safer,” said Bernds, referring to the Quebec carbon credit market that has been in force since 2013 and is considered have stable prices
The federal government raised $ 313 million from the price industries in Ontario from 2019 to 2021, before the Ontario system itself was executed, the “stick” to ensure that companies decrease their emissions.
Cabot and many other companies are now finding their way to the “carrot” part of that system, where they can obtain part of the money for green updates to their facilities.
Vincent Caron, vice president of the government relations of Ontario and the defense of the members of the Lobby Group Canadian manufacturers and exporters, called the Ontario Carbon Price System “The Gold Standard”, because companies can obtain up to 100 percent of what they pay in the system.
“I think companies are really sure that the program gives them enough certainty. The funds do not expire, they can unite several years,” he said.
And Cabot does not end up using the subsidies offered. Pearson says that the company has been paying in the Ontario pricing system, and is requesting to recover that financing so that projects improve their manufacturing processes and change their gas vehicles to electricity.
“Being able to recycle that income and bring them back to our business is a very good incentive for companies to make these improvements faster than they would normally do,” Pearson said.
