B.C. PREMIER PLAYS PIRATE
Tax on coal would hurt Alberta
Premier Rachel Notley says a proposal in British Columbia to retaliate against U.S. lumber tariffs would damage Alberta industry, but she doubts B.C. has the authority to move ahead with the plan.
B.C. Premier Christy Clark, who is seeking re-election on May 9, said this week a Liberal government would impose a massive carbon tax on thermal coal exports through her province’s ports, in response to new softwood lumber tariffs imposed by the U.S. government.
Calling thermal coal among the dirtiest sources of power and heat, Clark said her goal is to make these exports uncompetitive. Most of these shipments come from U.S. producers, though an Alberta mine exports thermal coal to Asian customers through Prince Rupert.
Notley, who is united with Clark in support of the Trans Mountain pipeline expansion that would deliver Alberta crude to overseas customers, took aim at the B.C. premier over the proposed coal tax.
“People who support that idea or support people proposing that idea ought to think about where their loyalties lie because, quite frankly, it’s not good for Alberta,” Notley said.
“I also don’t know the particular idea will get too far because I’m not convinced that authority actually exists within the provincial government.”
According to Alberta Energy, all of the province’s thermal coal exports last year came from Westmoreland Coal Co.’s mine west of Edmonton. The Coal Valley mine produced 2.2-million tonnes last year.
Still, Canadian thermal coal accounted for just six to seven per cent of B.C. exports of the mineral last year, dwarfed by shipments from American companies, according to Clark Williams-Derry, director of energy finance at the Seattle-based think-tank Sightline Institute.
Alberta’s thermal coal is transported from the Coal Valley mine on rail cars before being loaded on ships headed largely to Asian power utilities, according to Westmoreland.
In a 2016 news release, Colorado-based Westmoreland said the Coal Valley mine is a non-core asset, and that it was aggressively pursuing “strategic alternatives” for the facility, which typically suggests a potential sale. The company did not respond to requests for comment.
“A $70 per tonne fee would just make it financially impossible to export,” Williams-Derry said. “Right now, the market for thermal coal is pretty soft, and if coal companies are making a profit, it’s only a slim profit.”
The Coal Association of Canada, which is calling on Clark to back away from the “egregious levy,” warns the proposed coal tax would result in layoffs for all of the Coal Valley mine’s 300 full-time workers. The group said the move would also affect local contractors and the companies involved in shipping the coal, while hitting government royalties.
“This type of policy-making is not in the spirit of the barrier-free trade and would have significant impacts on coal production outside of B.C.,” the group said in a statement.
Clark has called on Ottawa to respond after the U.S. imposed an average duty of 20 per cent on softwood lumber imports from Canada, which will hurt B.C.’s forestry industry.
In the final leg of B.C.’s election campaign, Clark said this week she would impose a roughly $70-pertonne carbon tax on thermal coal exports, if the federal government doesn’t act.
The proposed coal tax comes at a time that she is considered Alberta’s ally on the Trans Mountain pipeline expansion, which would expose the province’s crude to overseas markets. Clark’s opponent, B.C. NDP Leader John Horgan, is a staunch opponent of the pipeline.
Notley said the provinces and the federal government should be working together on a response to U.S. softwood lumber tariffs, instead of adopting policies that create “winners and losers.”