The days of infinite growth in Alberta’s oilsands are over with the Alberta government’s blockbuster climate change announcement on Sunday, which attracted broad support from industry and civil society.

“This is the day that we start to mobilize capital and resources to create green jobs, green energy, green infrastructure and a strong, environmentally responsible, sustainable and visionary Alberta energy industry with a great future,” Premier Rachel Notley said. “This is the day we stop denying there is an issue, and this is the day we do our part.”

Notley and Environment & Parks Minister Shannon Phillips released a 97-page climate change policy plan, which includes five key pillars.

1) Carbon will be priced economy-wide at $30/tonne by 2018.

2) Coal-fired power plants will be phased out by 2030.

3) Oilsands emissions will be capped at 100 megatonnes (Mt) per year (recent Environment Canada figures predicted a 2020 output of 103 Mt from the sector), which amounts to allowing current construction to go ahead, but that’s it. That means to expand production beyond current projects, per barrel emissions will need to be reduced.

4) Methane emissions from oil and gas operations will be cut by 45 per cent in 2025.

5) 30 per cent of all electricity will be generated by renewables by 2030.

It is a staggeringly significant proposal, one that far surpasses anything the former Progressive Conservative government imagined in the course of its 43-year reign. The announcement — delivered at Edmonton’s Telus World of Science — was benefitted by appearances from CEOs of Suncor, Canadian Natural Resource Ltd. (CNRL), Shell and Cenovus, something far-right activist Ezra Levant dismissed by alleging the massive energy companies “don't represent the industry.”

Environmental groups such as the Pembina Institute and Clean Energy Canada were also on stage. Getting all of those players in support of one climate strategy is a huge testament to the leadership of University of Alberta energy economist Andrew Leach, who chaired the climate change panel.

Climate Change Policy Plan Garners Broad Support

With the exception of the rabidly conservative Wildrose Party and former deputy premier Thomas Lukaszuk, it seemed every serious player in politics and industry celebrated the announcement. The NDP-affiliated Broadbent Institute, headquartered in Toronto, concluded: “On a public policy Richter scale, Alberta’s new Climate Leadership Plan is an 11.”

Shell Canada announced that “these measures provide predictability and certainty and will help ensure that producers can responsibly develop and grow this significant Canadian resource while also addressing global concerns about climate change.”

Prime Minister Justin Trudeau congratulated Notley in a tweet now favourited over 1,300 times as “a very positive step in the fight against climate change.”  Political blogger Dave Cournoyer accurately dubbed it a “pigs fly” situation.

All of this means a whole lot given the impending Paris Climate Change Conference (COP 21).

Canada ranks 15th out of 17th countries for greenhouse gas emissions according to the Conference Board of Canada, with Alberta contributing 36 per cent of national emissions in 2013 despite only accounting for 11 per cent of the country’s population.

The expected spike in oilsands expansion was widely expected to nullify all other sources of emissions reductions in the Canada. The fact that Alberta, and by extension Canada, is now going into COP 21 with a detailed plan to address the province’s largest source of emissions – oilsands development and coal-fired power plants – speaks volumes about the desire to be taken seriously on the world stage.

Climate Plan May Increase Social Licence for Oilsands Operations

Another component that ostensibly drove oil execs to hop on the green bandwagon was the need to accrue “social licence,” or the support required to build pipelines to export its products. The veto of TransCanada’s Keystone XL pipeline represents what happens when such social licence isn’t secured.

By addressing runaway emissions, Alberta-based companies might actually stand a chance to build infrastructure like the Energy East pipeline, which would transport 1.1 million barrels of diluted bitumen from Alberta to Quebec and New Brunswick every day.

“The province’s climate strategy may allow our sector to invest more aggressively in technologies to further reduce per barrel emissions in our sector and do our part to tackle climate change,” said Tim McMillan, Canadian Association of Petroleum Producers’ president and chief executive officer, in a statement.

“We encourage the province to follow a balanced approach, recognizing that our sector can only become a global supplier of responsibly produced oil and natural gas if we are competitive on the world stage.”

The fight over pipelines is unlikely to dissipate. While Sunday’s announcement was a giant step in the right direction, it’s still not enough to avoid catastrophic global warming, according to a statement from Greenpeace.

“These policies are important first steps, but much bigger emission reductions will be needed for Alberta to do its part to keep global warming below 2 degrees Celsius,” Alberta climate and energy campaigner Mike Hudema said.

Hudema also noted that the province still has no short or long-term emission reduction targets.

“Targets give an important signal to business, let the world know where Alberta is headed, and help ensure that direction leads to the reductions that science and equity demand,” he said.

The Pembina Institute has historically supported a higher carbon tax than what was proposed on Sunday – with $40/tonne in 2016, $50/tonne in 2017 and $60/tonne in 2018 — but the plan is an indisputably major upgrade from the Specified Gas Emitters Regulation (SGER), which taxed Alberta’s largest emitters (103 at last count) at the equivalent of $1.80/tonne.

George Hoberg, professor in the forest department at the University of British Columbia, notes there’s still plenty of work to be done but that: “Today is a day for celebration. Alberta has bent its carbon emissions curve, and provided a lever to Canada to show real climate leadership.”

Ultimately, the future of Canada’s environmental reputation may rely on the work that Trudeau and Environment and Climate Change Minister Catherine McKenna complete during and after the Paris conference. But Sunday’s announcement out of Alberta sets quite the standard.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

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

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

It may come as a surprise to some that Alberta pioneered carbon pricing — not just in Canada, but for all of North America.

That’s right: the province with the fastest growing greenhouse gas emissions in Canada was the first place on the continent to put “polluter pays” legislation into place almost exactly eight years ago.

“Even back in 2007, Alberta was getting pressure over its environmental management, particularly of the oilsands. This may have been in response to that,” Matt Horne, associate B.C. director at the Pembina Institute, told DeSmog Canada.

Since then, three other provinces have joined the carbon pricing club: British Columbia with a carbon tax and Quebec and Ontario with cap and trade.

Each system is meant to, in theory, shrink provincial carbon footprints while allowing economies to remain strong and competitive. (If you want to totally geek out on the differences between Canada's carbon pricing systems, check this paper out).

With support for a national carbon pricing system growing, Canada need look no further than these provinces to learn some lessons. So, let's start with the first: Alberta.

Canada’s First Carbon Price: The Alberta Carbon Levy [view:in_this_series=block_1]

Although a pioneering system, Alberta’s carbon levy or Specified Gas Emitters Regulation (SGER) has not been effective in decreasing emissions in the province.

The carbon levy goes after the big emitters in the province — those producing more than 100,000 tonnes of GHG emissions. Mainly oilsands operations and coal-fired power plants — which make up roughly 50 per cent of the province’s total carbon footprint — fall into this category.

Rather than requiring emitters to make overall reductions in GHG emissions, the Alberta system requires a 12 per cent reduction in GHG-intensity of their product.

That means that as long as a project or facility produces 12 per cent less GHG emissions per dollar or barrel of bitumen than it did in the baseline year, the overall carbon footprint of that project is free to grow.

“Alberta’s system is an intensity-based system, which means you can potentially increase your total emissions as long as your intensity goes down,” Philip Gass, a senior researcher at the International Institute for Sustainable Development, said.

Companies unable to make the 12 per cent reduction in energy intensity pay a $15 levy per tonne of GHG emissions.

Source: Pembina Institute

The Alberta system also allows for carbon offsets — the option to purchase the right to emit from other large emitters that have met their reduction targets. 

However, the flexibility provided to polluters in Alberta is both the system’s strength and weakness.

“The short answer is Alberta’s carbon levy has not been effective,” Horne said.

“But that is not an indictment of the system itself. The problem stems from the relatively weak parameters they’ve used to populate it.”

Alberta’s carbon levy may need to toughen up as international pressure to limit emissions grows.  

As the world prepares for the upcoming UN climate summit in late 2015, some countries have turned their attention to the oilsands, asking how Canada plans to curtail the resource’s growing emissions. A recent report argues development of the oilsands stands at odds with Canada’s climate targets.  

For more on Alberta's carbon levy read How Carbon Pricing Currently Works in Alberta from the Pembina Institute. For a more detailed analysis of the levy read Andrew Leach's analysis in the Canadian Tax Journal (pdf).

Image Credit: Kris Krug

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.