Friday, 26 June 2015

Alberta Increases Its Carbon "Price"

I put the word price in the title in quotations because the province of Alberta has announced plans to tighten its emissions standards under its Specified Gas Emitters Regulation, the first-ever policy in Canada to impose some sort of a pricing mechanism on greenhouse gas emissions. You read that correctly: Alberta, home to the "tar sands" (I prefer the older term "oil sands"), not climate-taxing British Columbia, was the first to impose a price on carbon emissions. In fact, other than Boulder, Colorado's carbon-tax-like electricity surcharge, this was the first in North America. The catch is that the SGER is not a carbon tax unless one of the specified emitters exceeds a particular emissions "intensity," a measure of emissions per unit of production. The requirement was a twelve percent reduction from baseline levels. The bottom line was that emitters were only required to become more efficient with their greenhouse gas emissions, rather than actually reduce them. The price for being unable to sufficiently reduce emissions was $15 per ton of emissions over the required levels (12% below baseline), working out to a pretty low average cost of under $2 per ton. So this is not a carbon tax, but still, Alberta, which passed the legislation in 2003 and implemented the regulation in 2007, was first. Now, Alberta has announced that they will ratchet up both the price – from $15 per tonne (that's "ton" in Canadian) to $30 per tonne – and the reduction from baseline – from 12% to 20% -- by 2017. That is a welcome first step.

Earlier, in June, newly-elected Alberta Premier Rachel Notley announced that she would seek help on environmental policy from the national and Ontario offices of her New Democratic Party, a party that occupies a very liberal political left in Canada. I groaned, because I have historically found the NDP's climate policy positions a bit facile. The national NDP leader, Thomas Mulcair, has called for cap-and-trade because "polluters [should] pay for the pollution they create instead of leaving those costs to the next generation." There has always been a for-the-little-guy-against-the-big-guy populism in the NDP, and unfortunately climate policy has been similarly hostage to this party principle. The NDP, historically a very green party, even opposed British Columbia's carbon tax on the grounds that it hurt individuals. (Oy) I am heartened to see that the Premier has asked University of Alberta economist Andrew Leach to chair a climate advisory panel to help devise a new provincial climate policy.

Expect some change. The new Premier has said she's not a big fan of the current regulatory scheme, so this recent announcement is likely just a stopgap. She is also reported to be skeptical that a cap-and-trade plan is right for Alberta, so that leaves …. hmm, a carbon tax? Chair-designate Leach has written quite sensibly in the past that carbon pricing is not a "panacea," but depends on the stringency and the context. But at this point, it is hard to imagine any kind of scheme that is not a plain old carbon tax. Alberta will probably not try to one-up its neighbor, but seems likely to eventually accept a provincial carbon tax like British Columbia's. Trying to imagine some regulatory scheme to regulate Alberta's specified gas emitters just seems too anachronistic to me. What could you possibly tell Alberta's eight coal-fired power plants besides simply, "shut down"? What kind of a standard would be applied, above and beyond the already existing federal plan to phase them out? What about gas plants? What would their standard be, and why? I am hard-pressed to imagine a climate policy for Alberta other than a carbon tax.

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