No progress on jobs, pipelines means carbon tax will be all pain and no gain
Alberta’s NDP may have given UCP a gift with 50% hike, Claudia Cattaneo writes.
In a perverse kind of way, this week’s 50-per-cent increase in Alberta’s unpopular carbon tax — to $30 per tonne of carbon dioxide emissions — could be a big gift from Rachel Notley’s NDP government to her opponent, United Conservative Party (UCP) opposition leader Jason Kenney.
The increase means the province now ties British Columbia for having the highest carbon tax in the country.
But in Alberta it stings as the province uses more energy for heating and transportation.
The cost in a typical Alberta household of a $30 a tonne tax is $667 a year, compared to $362 in the typical B.C. household, according to a study by Jennifer Winter, an energy economist at the University of Calgary’s school of public policy. At $50 a tonne, the annual cost is $1,111 in Alberta and $603 in B.C.
It’s no small change in a lousy provincial economy with high unemployment. Polls consistently show strong disapproval of the tax, which piles on top of higher taxes and increased environmental regulations that are depressing job creation in the oil and gas sector.
Alberta’s hefty carbon tax is one of the big pieces of the province’s climate leadership plan, pushed through by Notley’s government when Alberta’s conservatives were in disarray and political implications seemed remote.
The question is whether Albertans embrace the tough medicine and its benefits, as claimed by the government, or will slam the door on the tax grab when they return to the polls next year. That’s what the UCP, which reunited conservatives last year and picked Kenney to lead them, is counting on. Meanwhile, the duelling views are clashing hard.
University of Calgary economics professor Trevor Tombe said the carbon tax is controversial because it’s visible in heating bills and at the pumps and because of its negative economic impact.
Even government estimates show it shrinks GDP and deters employment, he said.
Under the plan, the tax increases to $50 a tonne by 2022 to line up with federal goals. But other provinces are taking longer to ramp up.
Carbon is priced at $19 a tonne in the cap and trade market in Quebec and Ontario.
Provinces without carbon pricing are subject to the federal carbon price, which starts at $10 per tonne in 2018 and rises by $10 per year to $50 per tonne in 2022.
The Alberta NDP says the benefits of its carbon tax include economic diversification away from oil and gas, job creation from greener jobs, emissions reductions, tax rebates for those with lower incomes.
So far, green job creation hasn’t offset the estimated 100,000 oil and gas jobs lost over the last three years, partly due to Alberta’s climate change plan.
Cheryl Oates, communications director for Notley, said 2,000 jobs have been created from energy efficiency programs so far and another 1,300 jobs are expected. The recently announced winning bidders of renewable electricity projects are expected to create another 740 jobs, with 7,000 jobs overall expected in new renewable energy by 2030.
The province estimates it will collect $1.038 billion in revenue from the tax in fiscal 2017-18, rising to $1.396 billion in 2018-2019.
“All revenue from carbon pricing is reinvested back into Alberta’s economy to reduce emissions, support renewable energy and help Alberta families and businesses adjust to the price of carbon,” said Oates.
The government also argues that even with the increase in carbon pricing, Alberta has an overall tax advantage compared to other provinces because it has no provincial sales tax, health premium or payroll tax. It estimates Albertans and Alberta businesses will still pay at least $8.7 billion less in total taxes and carbon charges than if the province had the same tax system and carbon pricing as other provinces.
Kenney says he would immediately repeal the “job killing tax” if elected premier — and at the same time put a big dent in the federal government’s own climate change plan, which relies on Alberta toeing the line.
“Alberta families and jobcreators have suffered enough under this NDP government, and now they have to endure a 50 per cent increase in a carbon tax that hasn’t converted a single opponent of Alberta’s energy industry into a supporter,” Kenney said in a statement.
“The carbon tax was supposed to buy ‘social license’ for pipelines to get built. Instead, since the NDP announced its plan, Justin Trudeau vetoed approved Northern Gateway, Barack Obama vetoed Keystone XL, the National Energy Board effectively killed Energy East, and the NDP government in B.C. is doing everything it can to block TransMountain. Not one single government, party, or special interest group has gone from ‘no’ to ‘yes’ on pipelines as a result of the NDP’s failed tax on everything.”
If the trend continues, and the two remaining pipeline projects aren’t built, Notley would hand her political opponents another big gift by showing the tax is all pain and no gain.
At this time, the odds are hard to call because the future of both Keystone XL and the Trans Mountain expansion depend on the resolution of legal disputes with opponents.