June 28, 2023

Producers utilize natural gas as fuel from wellhead to burner tip. Well activities and gathering consume about 3.5% of production as fuel while gas plant operations consume about 2.3%. Pipelines, such as NGTL, utilize natural gas to operate compression, current fuel rate on NGTL is 1.86%. Based on the Output Based Pricing System (OBPS) fraction of 80% for 2022, the carbon price impact on producer cost will be CDN $0.04/MMBtu. As the OBPS fractions are tightened at 2%/year, the carbon cost impact to producers grows to CDN $0.25/MMBtu in 2030. Due to increased costs, Canadian producers will be unable to pass carbon costs onto downstream  consumers accessing US gas produced without a carbon price; AECO-NIT basis will widen.

See also:
The Largest Carbon Capture Countries 2023
Carbon Emissions Trading System (ETS) by Country 2024
Carbon Tax System by Country 2024
Carbon Crediting Mechanism by Country 2024
Canadian GHG Emissions by Sector 2005, 2019-2022, 2030
Large Emitters – Canadian Carbon Tax
Canadian Provincial Carbon Schemes
Canada’s Carbon Price Impact on Natural Gas 2022-2030
Federal Backstop Carbon Tax Rate Impact on Natural Gas 2020-2030