On Nov. 22, 2015, Alberta Premier Rachel Notely made a much
anticipated announcement about the future of Canada’s
heaviest greenhouse gas emitter: a carbon tax is coming. Intended
for implementation by 2017, the economy-wide carbon tax is set to
have both provincial and national implications. Along with the tax,
the Provincial government’s Climate Leadership Plan includes
a cap on emissions from the oilsands, and a phase-out of
coal-powered electricity generation. This timely announcement comes
as Canada prepares for next week’s UN Paris Conference.
The Carbon Tax
The details of Alberta’s plan will unravel in the coming
months but the Province has already received praise for setting the
carbon tax at what many economists and environmentalists consider a
reasonable level. Beginning in 2017, the tax will be set at $20 per
tonne, rising to $30 in 2018 and followed by a 2% above inflation
rate thereafter. The predicted result is an increase of gasoline
prices by roughly 7% by 2018 and an annual increase in heating and
transportation costs per household by roughly $300-$600. The
Alberta government promised to offset this burden with rebates for
lower income households. The new carbon tax is expected to raise
$3-billion annually by 2018, but unlike British Columbia’s
carbon tax, will not reduce other provincial taxes. The Alberta
government anticipates using these new revenues to fund renewable
technology, green infrastructure and transit.
Phasing Out Coal and Capping
Oilsands Carbon Emissions
The plan also features a phase out of coal-fired power in the
next 15 years, a 10-year goal to cut methane emissions in half and
incentives for using renewable energy. The plan also encompasses a
100-megatonne cap on carbon emissions from the oilsands, which
notably still allows the industry room to grow as the oilsands
currently emit roughly 70-megatonnes annually.
The UN Paris Conference
Alberta’s announcement comes after the new federal
government promised that Canada would be a key player in moving the
greenhouse gas discussion forward at the upcoming UN Paris
Conference. As part of this commitment, Mr. Trudeau promised to
work with the provinces to establish a pan-Canadian framework for
combating climate change, including the implementation of national
emissions reduction targets. Mr. Trudeau has specified a timeline
of 90 days after the UN Paris Conference to meet with the provinces
to develop this national approach. Ontario recently followed
Quebec’s lead by implementing a cap and trade system, and
British Columbia has had its carbon tax system in place since 2008.
As detailed above, Alberta’s new plan incorporates both of
these systems: a cap on its major greenhouse gas emitter as well as
an economy-wide carbon tax.
Alberta’s spring budget will likely provide more details
on the rebate program, and further overall financial details of the
new plan. To date Canada has not detailed a national climate
change strategy but the announcement from Canada’s heaviest
greenhouse gas emitter comes at a crucial time as Canada prepares
for next week’s UN Paris Conference.
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