Alberta imposes carbon tax, oil sands emissions cap

The Alberta government has done what it promised to do during its election campaign earlier this year, imposing measures to combat climate change including a carbon tax aimed at individual Albertans, phasing out coal-powered power plants and placing a cap on emissions from the oilsands.

Premier Rachel Notley made the announcement on Sunday afternoon, a day before Canadian premiers meet in Ottawa, the capital, to discuss climate change and a few days before the UN climate change conference in Paris.

Addressing environment and energy groups at the Telus World of Science in Edmonton, Notley said "This is the day that we set a better course for our economic future. 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 … This is the day we stop denying there is an issue, and this is the day we do our part."

Details of the Climate Leadership Plan are laid out in a government press release. Under the plan:

  • Alberta will phase out all pollution created by burning coal and transition to more renewable energy and natural gas generation by 2030.
  • Three principles will shape the coal phase-out: maintaining reliability; providing reasonable stability in prices to consumers and business; and, ensuring that capital is not unnecessarily stranded.
  • Two-thirds of coal-generated electricity will be replaced by renewables – primarily wind power – while natural gas generation will continue to provide firm base load reliability.
  • Renewable energy sources will comprise up to 30 per cent of Alberta’s electricity production by 2030.
  • A price on carbon provides an incentive for everyone to reduce greenhouse gas pollution that causes climate change.
  • Alberta will phase in this pricing in two steps.
    • $20/tonne economy-wide in January 2017
    • $30/tonne economy-wide in January 2018
  • An overall oil sands emission limit of 100 megatonnes will be set, with provisions for new upgrading and co-generation. (The oilsands currently emit 70 megatonnes per year)
  • In collaboration with industry, environmental organizations, and affected First Nations, Alberta will implement a methane reduction strategy to reduce emissions by 45% from 2014 levels by 2025.

According to the Alberta government, all of the proceeds from carbon pricing will be reinvested in Alberta, with a portion plowed into measures to reduce pollution, including clean energy research and technology, public transit and programs to help Albertans reduce their energy use. The carbon tax and associated carbon pricing initiatives are expected to bring in around $3 billion.

The oil and gas industry in Alberta has warned that any additional costs will be disastrous for a sector already under severe pressure due to low oil prices. The neighbouring province of British Columbia passed a carbon tax in 2008. The tax covers most types of fuel use and carbon emissions, and has been deemed a success for not only reducing reducing fuel use but lowering personal income taxes, since the carbon tax is revenue neutral by law.