Alberta renews, updates CO2 levy but warns economy-wide scheme could replace

Published 18:37 on June 25, 2015  /  Last updated at 19:00 on June 25, 2015  /  Americas, Canada  /  No Comments

Alberta has renewed and updated its eight-year old carbon levy by doubling the price and raising the reduction target, but warned that these "interim measures" could be replaced by a more ambitious, economy-wide plan following a review of the Canadian province’s climate strategy.

Alberta has renewed and updated its eight-year old carbon levy by doubling the price and raising the reduction target, but warned that these “interim measures” could be replaced by a more ambitious, economy-wide plan following a review of the Canadian province’s climate strategy.

Under the new rules for Alberta’s Specified Gas Emitters Regulation (SGER), which are to be phased in starting next year, companies emitting more than 100,000 tonnes of CO2e will have to pay C$20/tonne from 2016 and C$30 from 2017, above the current C$15, the province’s environment minister Shannon Phillips announced Thursday.

In addition, eligible emitters will also be required to next year keep the GHG-intensity of their products below 85% of a historical baseline. From 2017 that drops to 80%, down from the current 88% goal.

The SGER programme, which came into force in 2007 but was due to expire on June 30, will continue to give companies compliance options including buying Alberta-based carbon offsets or contributing to a provincial technology fund.

“By updating these regulations, we’ll demonstrate that we are beginning to get serious about this issue. These interim measures will reduce by an estimated 13 million tonnes in GHGs by 2017,” Phillips said, compared to estimated cuts of 8 million tonnes under the current rules.

“(But) let’s be clear, no other jurisdication and no energy market is going to accept that this constitutes an effective climate change policy. We need to do better … We need a climate plan that is bold, ambitious … (and) will bring Alberta into a new era of responsible energy development and environmental sustainability. It needs to address emissions from all sectors, not just the petroleum industry. If we get it right, our environmental policy will make us world leaders on this issue instead of giving us a black eye around the world.”

She said under the previous SGER rules, which have been panned for years by green groups, Alberta prices GHG emissions from industry at an effective rate of “a little less than C$2/tonne”.

Experts estimate the new rules will increase the scheme’s cost to Alberta’s energy sector by 300%, inflicting additional pain on an oil industry already reeling from a collapse in global crude prices.

A NEW PLAN

Phillips also announced that University of Alberta professor Andrew Leach will lead a panel of experts tasked with conducting stakeholder consultations starting this summer, which will help the province design a new climate plan ahead of upcoming UN talks.

When asked whether that could lead Alberta to decide to ditch its current system and shift to a carbon tax or cap-and-trade model, possibly even prior to the new SGER rules coming into force, Phillips did not rule anything out, adding that “whatever we do will be with a phase-in period”.

The new plan, to include strategies surrounding renewable energy and energy efficiency, will also be linked to reforms of Alberta’s energy royalty system, which has filled government coffers for years with revenues from the province’s beloved oil and gas industry.

Alberta’s government regularly attracts criticism from at home and abroad for not doing more to curb the sector’s GHGs – the main reason the western province’s emissions make up more than a third of Canada’s total despite being home to a little over 10% of its population.

Alberta is also currently off-track to meet its own 2020 emission target, which has been labelled both unambitious at 50 million tonnes below BAU levels, and unrealistic due to its heavy reliance on largely unproven and expensive carbon capture and storage.

Phillips said the measures announced today would help Alberta “get closer” to its goal, but that hitting it would depend on other factors or policies.

According to Canada’s Pembina Institute, Alberta needs to cut its emissions by 27 million tonnes or more than 10% between 2014 and 2020 to hit the target, which effectively allows the province to grow its GHGs by 12% above 2005 levels.

PARIS

Alberta’s new premier Rachel Notley, who along with her left-leaning New Democratic Party swept to power in May in a surprise election result, last week said in a newspaper interview the province would unveil its new strategy before the Nov. 30 start of UN climate talks in Paris.

And while she warned that Canada’s overall negotiating position in Paris may largely depend on which party wins this autumn’s federal election, Alberta would be ready to “assert itself” on the climate issue at the high-level summit.

Many of Canada’s provinces including Alberta, Ontario and Quebec have said they are pushing forward with their own plans to tackle climate change in the absence of leadership from Canadian Prime Minister Stephen Harper’s federal Conservative government.

By Mike Szabo – mike@carbon-pulse.com

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