Canada: Alberta Budget 2016 And Climate Change Leadership Plan

On April 14, 2016, Alberta’s NDP government released its new fiscal plan (the 2016 Budget), which implements the Climate Change Leadership Plan (the Plan) previously announced by the government this past November. The key elements of the Plan include the following:

  • implementing a carbon tax that places an economy-wide price on greenhouse gas emissions
  • phasing out emissions from coal-generated electricity by 2030 and replacing that capacity with electricity produced by renewable sources and natural gas
  • capping total emissions from the oil sands at 100 megatonnes (Mt) per year
  • implementing a new methane emission reduction strategy with the goal of reducing methane emissions by 45% from 2014 levels by 2025

Each of these elements is discussed in greater detail in the November 23, 2015 Osler Update titled “ Alberta’s New Climate Change Leadership Plan.”

Of the four elements listed above, the cornerstone of the Plan is an economy-wide carbon tax. The carbon tax applies not only to large industrial emissions, which have been taxed in Alberta since 2007, but also to individuals’ and other small emitters’ greenhouse gas combustion or consumption. The new carbon tax is to be levied by the purchase of transportation and heating fuels, and will affect individual Albertans and businesses, not just at the pump and on their utility bills, but in all purchases to which the levy applies within the distribution chain. For instance, the price of imported items is anticipated to increase as transportation costs rise by the amount of the tax.

When the Plan was first announced, Premier Notley promised that the carbon tax would be “revenue-neutral,” a statement that garnered much criticism for its inaccuracy. Nonetheless, the government does intend to reinvest carbon tax revenues in the economy, through a combination of tax rebates, infrastructure spending and other government investments. The 2016 Budget provides the first detailed insight into the revenues and expenditures that the carbon tax is expected to generate.

The new carbon tax will come into effect on January 1, 2017, with an initial price of $20 per tonne of carbon dioxide or equivalent emissions and rising to $30 per tonne in 2018. This is expected to generate $274 million in 2016-2017 for government coffers, increasing to $1.7 billion by 2018-2019. Over five years, the carbon levy and compliance payments made from other parts of the Plan  are expected to raise a combined gross revenue of approximately $9.6 billion. This additional revenue comes at a critical time for the province, as infrastructure and other spending needs are high, whereas the Heritage Fund has been decimated by a string of deficit budgets and the deficit continues to grow due to the ongoing slump in the oil and gas industry and the associated reduction in provincial royalties.

For now, the government has pledged not to apply the Plan’s revenue stream to pay down the increasing provincial debt. So, where is the revenue going?

Approximately one-third of the forecast revenue, $3.4 billion, is expected to be spent on helping households, businesses and communities adjust to the carbon tax. These expenditures will include the following:

  • $2.3 billion on consumer rebates available to lower-income Albertans who are the least able to bear the cost of the carbon tax or avoid it through investments in energy-efficient homes and vehicles. The government expects that approximately 60% of households will be eligible for rebates with these thresholds. However, scant acknowledgement has been made that the rebate effectively discourages a majority of households from changing their carbon use practices, the very point of having an economy-wide price.
  • $865 million in foregone tax income due to a reduction in the small business income tax rate to 2% (from 3%), starting January 2017. This new announcement by the government will come as welcome respite from the new regime for small business owners, but it remains to be seen to what degree the income tax reductions will offset the direct and indirect additional business costs attributable to the carbon tax regime.
  • $195 million for other adjustments. These other adjustments are to include Indigenous community payments and “coal community transition,” which is suggested to involve retraining of coal workers to transition into other areas of the economy as well as assistance to communities that depend on coal production. As with the initial announcement of the Plan, little detail is offered as to how coal plant operators will be compensated for their stranded capital and incentivized to cooperate with the government’s coal phase-out schedule.

The remaining $6.2 billion in revenues is slated for a variety of investments, which the 2016 Budget describes as follows:

  • $3.4 billion is slated for large-scale renewable energy projects, innovation and technology investment and bioenergy initiatives, along with the administrative costs of implementing the Plan. The 2016 Budget did not address the allocation between administration costs and investment, and also did not clarify to what degree the government will invest directly in renewable energy project development. The Climate Change Advisory Panel, whose recommendations led to the Plan, proposed a competitive auction process for renewable energy credits (RECs), but did not recommend that the government procure fixed-price power purchase contracts. In the 2016 Budget, the province has confirmed that the Alberta Electric System Operator will conduct a competitive process in late 2016, but has not indicated whether some fixed-price power purchase agreements will be allocated as well as RECs. Many commentators believe that fixed-price power purchase contracts are necessary to encourage sufficient renewable generation capacity to come online at current electricity prices in order to phase out coal on the anticipated schedule.
  • $2.2 billion is to be spent on green infrastructure investments, which include spending on public transit and energy efficiency initiatives.
  • $645 million is allocated to open Energy Efficiency Alberta, a new provincial agency. The purpose of this agency will be to support energy efficiency and power micro-generation initiatives. Other provinces, notably Saskatchewan and Ontario, have implemented government programs and subsidies for micro-generation, with varying degrees of success. The Alberta government offered little detail as to what parts, if any, of those programs will be mirrored in Alberta.

The economy is contracting in Alberta at present, which generally brings with it lower consumption of fuel and a reduction in greenhouse gas emissions. This could result in lower realized revenue under the carbon tax and compliance payments, and correspondingly reduce the investments contemplated above. Even with the additional revenues from the Plan, the overall provincial revenue forecast in the 2016 Budget is lower than in previous years, and lower than expected for this year. All industries affected by the carbon price will be incentivized to streamline operations in such a way as to keep growing, despite the additional burden of the carbon levy.

Further, the government is also free to tweak the revenue allocation as it sees fit, which may benefit some industries and communities at the expense of others.

Finally, the 2016 Budget does not address how much the implementation of the Plan is expected to decrease greenhouse gas emissions. With a large portion of Alberta’s emissions attributable to the combustion-intensive oil and gas industry, the effect of taxing household consumption of fuel and electricity may be more to raise provincial revenue than to meet the province’s emissions reduction commitments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions