Keep Alberta’s carbon levy programme but raise CO2 price to $50, leaked report recommends

Published 02:11 on September 28, 2015  /  Last updated at 21:26 on August 10, 2017  /  Americas, Canada, Carbon Taxes  /  No Comments

A leaked government-funded analysis recommends increasing Alberta’s carbon levy to $50 per tonne as the best way to cut the Canadian province’s power sector emissions, The Canadian Press reported on Sunday.

A leaked government-funded analysis recommends increasing Alberta’s carbon levy to C$50 per tonne as the best way to cut the Canadian province’s power sector emissions, The Canadian Press reported on Sunday.

That’s more than three times the current C$15 price, which is to be increased to C$20 next year and C$30 in 2017 under reforms announced this summer by the province’s New Democratic Party (NDP) government after it was elected in May.

The study, conducted by the Cambridge, Massachusetts-based Brattle Group, weighed nine ways of reducing coal-fired energy generation in Alberta including shuttering power plants and imposing emissions caps and renewable energy targets.

Alberta is the top GHG-emitting province in Canada, and coal power is Alberta’s second largest source of climate-warming emissions after the oil and gas sector and its activities in the province’s tar sands.

The Brattle report said building on the province’s current Specified Gas Emitters Regulation (SGER) system is the best option, though it would also raise electricity prices more than any of the other alternatives.

“Doing so builds on the existing regulatory framework, can be designed to be effective in reducing emissions, supports the development of renewables through offsets, and is already compatible with the existing wholesale electricity market.”

The study was delivered to Alberta’s energy ministry and power sector regulator in July 2014, The Canadian Press said. It is now, along with hundreds of other submissions, before a panel tasked with setting a new climate change policy for the province ahead of this year’s UN talks in Paris.

Under the SGER, emitters must pay the levy if they exceed a 12% emission reduction goal, which is measured against a historical baseline that was set back when the scheme was introduced.

Alberta’s new NDP government has also pledged to raise that 15% in 2016, and to 20% the following year.

The Brattle report has recommended setting this threshold at 50%, adding that while a C$40/tonne carbon price could also be effective, a C$50/tonne fee would be better.

A 50% target and C$50 carbon price would up renewable generation by a third while cutting the province’s emissions by 15% by 2034, the report said, which would be more than any option considered other than retiring coal stations.

However, it added that this so-called “50-50 option” would also see consumer power prices rise by 14%.

The panel is expected to present its recommendations in November.

By Mike Szabo – mike@carbon-pulse.com

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