Alberta’s carbon tax would more than triple under government’s proposal

 By Karen Kleiss, Edmonton Journal April 8, 2013

EDMONTON – The Alberta government is awaiting industry feedback on a controversial proposal to increase the provincial carbon tax to $40 from $15, Energy Minister Ken Hughes said Monday.The idea has reignited debate about Alberta’s carbon levy, with critics calling the proposed increase a “shocking, disruptive and unilateral” move while supporters say it could mark a “substantial strengthening” of environmental protection efforts.

“People are analyzing it and looking at it in detail, and I’m looking forward to direct feedback from both industry groups and specific companies as well,” Hughes said outside the legislature Monday, adding he expects to hear back from industry “over the next few weeks.”

The initiative is led by Environment Minister Diana McQueen with support from the energy department, Hughes said.

“We’re both working on this very closely, analyzing the numbers, engaging with industry, seeking feedback from industry,” he said.

The so-called 40/40 plan was floated with industry officials in recent weeks, none of whom would comment on discussions with government.

Currently, large industrial polluters must reduce carbon emissions intensity by 12 per cent or pay a $15-per-tonne tax. Under the proposed plan, they would have to reduce emissions intensity by 40 per cent or pay a $40-per-tonne tax.

After the proposal became public last week, McQueen said only that the province has met with the federal government and industry officials for preliminary discussions. Department officials have publicly confirmed that an internal review of Alberta’s carbon tax is well underway.

“The reality is that the regulation and the carbon intensity reduction regime were always meant to start the process with a 12-per-cent carbon intensity reduction at $15 a tonne, to be revisited on a periodic basis,” Alberta Environment deputy minister Dana Woodworth told a government committee in February. “That process is actually unfolding as we speak.”

McQueen is in Washington, D.C. with Premier Alison Redford and International Relations Minister Cal Dallas, working to persuade U.S. government officials to approve the Keystone XL pipeline, which would carry Alberta bitumen to refineries on the Gulf Coast.

Alberta’s environmental record has become a key component of provincial lobbying efforts, particularly after U.S. President Barack Obama highlighted climate change concerns in his January inaugural address.

The province refers to the levy as a price on carbon — not a tax — arguing that it is a compliance tool and that companies always have the option to reduce carbon emissions or trade credits.

Opposition parties call it a tax, and Wildrose Leader Danielle Smith said Monday that Redford is about to break her promise not to increase taxes.

“I’d certainly like to get some clarity about whether they’re going to be increasing taxes because if they do, it’s not in keeping – once again – with what the premier promised,” Smith said.

“I’ve talked already to industry leaders, they think it will have a devastating effect on the economy. Trying to get to a 40-per-cent emissions reduction in the time period that is being proposed does not sound doable from our oilsands players.

“We have to have a meaningful emissions reduction policy that is actually achievable and this 40/40 plan, it fails on both counts.”

During question period, Smith called the proposal “shocking, disruptive and unilateral,” and repeatedly asked the government for details. Neither deputy premier Thomas Lukaszuk nor Hughes offered additional information.

Alberta’s Pembina Institute has been pressing the province for years to increase Alberta’s carbon tax, saying it is the most powerful way to encourage industry to reduce emissions and to ensure that Alberta meets its 2008 emission reduction targets of 50 megatonnes by 2050.

Policy director Simon Dyer said Alberta companies currently pay roughly $1.80 per tonne to comply with the regulation, and that under the proposed 40/40 plan that price could rise to $16 per tonne, which could mark a “substantial strengthening” of Alberta’s environmental protection laws.

“We would welcome that, but obviously the devil is in the details and we don’t want to endorse something without seeing it,” Dyer said, noting that Pembina has previously had a strong working relationship with government and hasn’t been consulted on the proposal.

“Clearly this is high stakes as relates to concern in the U.S. about our climate policy. Time is of the essence, and we would appreciate the opportunity to learn more about the specifics.”

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