It’s finally happening: after years of stalling by the Progressive Conservatives, Alberta’s new NDP government announced Thursday it will double the province’s meager carbon levy on large emitters by 2017.

Industry and environmentalists alike welcomed the decision, while also saying it doesn’t go far enough. 

Currently, any facility that emits more than 100,000 tonnes of greenhouse gases per year must reduce its emissions by 12 per cent below typical performance or pay $15 per tonne for emissions over the baseline. By 2017, the new framework will require companies to lower emissions by 20 per cent below typical performance, with a $30-per-tonne levy for emissions above that target.

“It’s not going to drive the meaningful reductions or give the market incentives that we need,” said Ed Whittingham, executive director of the Pembina Institute.

Pembina advocates for a $40-per-tonne levy with a 40 per cent emissions reduction target. Whittingham said the NDP had three options given the circumstances: let the regulation expire at the end of the month, kick the can down the road by renewing the current framework (as previous governments often did) or actually make some changes.

Dan Woynillowicz, director of policy at Clean Energy Canada, said the most impressive element of the announcement was its decisiveness.

“The previous government has been talking about changing the SGER, or changing the price, or changing the coverage for several years,” he said. “Within a matter of weeks, this government has come in and said: ‘We’re going to do that, we’re going to make that change.’ ”

Cenovus Wants Economy-Wide Carbon Price

Brett Harris, media lead at Cenovus Energy — which has historically supported a price on carbon — says the company is pleased the government has provided clarity on the issue. However, he says “in an ideal world” the company would like to see a pan-Canadian or pan-North American carbon pricing regime to create a “level playing field.”

Shell Canada also welcomed the new rules.

Despite support from energy companies, the concept of a carbon tax has consistently been ridiculed by Canada’s federal government.

Dale Beugin, director of research at Canada’s Ecofiscal Commission, acknowledges a national or international carbon tax should be the end goal, but notes it’s a difficult thing to achieve and that reform must happen incrementally.

“It’s great that the big industrial emitters are priced by the SGER, but that’s not the only emissions in the economy: a good carbon pricing policy is going to be broad as well as stringent, Beugin said. “You want to make sure you’re going after the small emitters, the vehicles, the buildings, the process emissions from waste and agriculture.”

How Alberta’s Carbon Levy Works

There are 103 large emitters in Alberta. While most of the sites are gas plants, a great majority of emissions come from seven coal power plants and five oilsands mines/upgraders. Such companies have three options if they exceed the target: buy carbon offsets, use Alberta Emission Performance Credits (similar to carbon offsets but rewarded based on performance) or contribute to the Climate Change and Emissions Management Fund, which funds climate change projects.

“What [this change] is going to do is drive more money into offsets in the tech fund,” Whittingham said. “There are some greenhouse gas savings or benefits to be had from that.”

Andrew Leach to Head Climate Change Panel

In addition to announcing changes to the carbon levy, Environment Minister Shannon Phillips reported the government is forming a climate change panel, chaired by Andrew Leach, the University of Alberta environmental economist.

"Andrew Leach is pretty much the first person I'd choose for that gig, so good job,” said Chris Turner, the author of The Geography of Hope and The Leap.

According to a feature Leach wrote for Maclean’s, the panel will examine a wide assortment of potential actions. It will deliver a report to the government in the fall, prior to Premier Rachel Notley’s trip to Paris in December to attend the United Nations climate change summit.

Many options will need to be considered. Whittingham says the province must find a way to phase out coal-fired electricity, ensure renewable energy fills a fair share of that void and implement energy efficiency programs, as well as deal with growing emissions from the oilsands.

Photo: Kris Krug via Flickr

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