NDP DOUBLES CARBON TAX
Alberta to implement new levy as part of climate change plan
The NDP government moved to clean up Alberta’s tarnished environmental reputation Thursday, pledging to double the province’s carbon levy on large industrial emitters within two years and launching consultations on a broader climate change plan to be released later this fall.
Environment Minister Shannon Phillips announced the province’s existing $ 15- per- tonne levy will increase to $ 20 per tonne next year and $ 30 per tonne in 2017.
The system introduced by the former Tory government in 2007 requires about 100 large industrial facilities — such as oilsands operations and coal- fired power plants — to cut emissions intensity by 12 per cent below a baseline.
Under the NDP’s plan, that target will stay the same this year, but increase to 15 per cent in 2016 and 20 per cent in 2017. “We elected to take an important first step to signal a further action on climate change. That is something that we saw successive previous governments dither on, put it off, never any real decisions,” Phillips said in Edmonton.
“Our pledge during the election campaign was to exercise leadership nationally and internationally on climate change, and that’s exactly the first step we’ve taken today.”
Greenhouse gas emissions from energy- rich Alberta have been climbing for more than a decade, soaring 53 per cent since 1990. Emissions hit 267 megatonnes in 2013, with federal data projecting Alberta’s amount to grow to 287 Mt by 2020.
The revamped carbon levy is expected to reduce emissions by an additional five Mt by 2017, on top of the eight- Mt reduction from the original plan.
Phillips also announced University of Alberta energy economist Andrew Leach will chair a comprehensive review of the province’s climate change policy over the next three months, intending to have a preliminary proposal ready well before international climate change talks in Paris set for December.
Leach said “the timelines are short” but the review will include extensive consultations with the public, First Nations and industry.
“The conversation must take place with Albertans in a broad sense and not simply with a small cadre of administrative experts,” he said.
Premier Rachel Notley’s NDP, which defeated the Progressive Conservative government in last month’s provincial election, campaigned on pledges to toughen Alberta’s environmental standards, introduce new strategies on renewable energy and energy efficiency and, if possible, accelerate the planned phase- out of coal- fired generation.
Phillips said the review will encompass those promises and will also be able to consider policy mechanisms used in other jurisdictions, including a British Columbia-style broad- based carbon tax.
Alberta’s oilsands have become a target for environmentalists because of their significant carbon footprint, with opposition stalling pipeline projects intended to open new markets for the province’s crude.
The NDP pledge of a more stringent climate change plan — along with its plan to review Alberta’s energy royalty rates — has led to concern in an energy industry already grappling with low oil and natural gas prices.
With an announcement on the royalty review coming Friday, Phillips said the government knows the issues of royalties and climate change costs are intertwined for the energy industry.
“Our intention here is that these two processes work together ... so that we ensure that all of these various reviews ensure stability for industry, they ensure predictability,” said the Lethbridge- West MLA.
When the levy increases are fully in effect, it will mean costs of an additional 30 to 45 cents per barrel for oilsands producers and an extra $ 3.60 per megawatt- hour for electrical utilities. The average cost per tonne of emissions across all facilities covered by the regulations will triple: to $ 6 from $ 2.
The Canadian Association of Petroleum Producers said it appreciated the higher levy will be phased in over 18 months, but warned the industry faces up to $ 800 million in increased costs over the next two years because of the hike and the NDP’s move to boost corporate taxes.
“The changes we saw today will add substantial costs to our industry, but costs that ... will be driving us to better performance, which is really the goal of it,” CAPP president Tim McMillan said in an interview.
The NDP’s move was generally hailed by environmental groups as a positive step that had been long delayed under the previous Tory regime.
But the Pembina Institute’s Ed Whittingham acknowledged the increased levy, by itself, won’t lead to absolute emission reductions. He said Leach’s panel will have to deal with issues such as replacing coal and carbon pricing.
“We need to move to a system that is going to drive reductions,” said Whittingham.
That point was echoed by Liberal Leader David Swann, who said the NDP had taken “cautious” steps forward.
“All we are doing here is slowing the acceleration of carbon emissions. We need to see a commitment to absolute reductions,” he told reporters.
Other opposition leaders were less pleased, with Wildrose’s Brian Jean describing the levy as a tax increase that would have no impact on emissions.
Tory Leader Ric McIver initially told reporters the government’s levy hike may be too aggressive, especially when combined with the corporate tax increase and royalty review.
“Anytime you increase costs, you run the risk of taking away Alberta’s jobs and hurting Alberta’s economy,” he said.
Later in question period, McIver said the previous PC government had planned to double the stringency of emission intensity reduction to 24 per cent and suggested the NDP plan is “a rehash environmentally of what was going to happen anyway, except we’re seeing more rules and more regulations.”