Prime Minister Mark Carney signs an MOU with Alberta Premier Danielle Smith in Calgary on Nov. 27.Jeff McIntosh/The Canadian Press

Chris Severson-Baker is executive director of the Pembina Institute.

The stakes are high as Alberta and Ottawa sit down to hammer out the contours of their memorandum on energy and climate policy, and negotiations over the next few months will be fraught with complex policies and regulations. Yet the main question is simple: Will Alberta bring genuine good faith to the negotiating table?

Initial signs are not good. Just a week after Alberta signed the memorandum of understanding, which committed it to strengthening its industrial carbon pricing system, the province pushed through regulatory changes that do the opposite.

Alberta’s system only functions if companies are confident the carbon credits they will earn in future (if they reduce their emissions) will hold a reasonable value. If they suspect otherwise, a large component of the business case for their low-carbon investments is lost. This is why achieving, in short order, the much-talked-about $130 credit value that Alberta committed to in the MOU, is vital.

Like any market, supply-and-demand is king: when supply of credits is high, their value decreases. And, once the value of a credit tracks too far away from the price companies must pay for every tonne of carbon they emit........

© The Globe and Mail