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This is the ninth post in the Environmental Law Centre’s new blog series exploring climate change law in Canada. This blog series provides updates on climate change law developments and includes insights from our related law reform research. This blog series is generously funded by the Alberta Law Foundation.

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Following their historic meeting late last month, Prime Minister Trudeau, President Obama and President Peña Nieto issued a Leaders’ Statement on a North American Climate, Clean Energy, and Environment Partnership (the “Statement”).  The Statement represents a commitment by the countries to create an enduring partnership and action plan to set North America on a path to a more sustainable future.  Several matters are addressed in the Statement:

  • advancing clean and secure power,
  • driving down short-lived climate pollutants,
  • promoting clean and efficient transportation,
  • protecting nature and advancing science, and
  • showing global leadership in addressing climate change.

The Statement provides guiding principles and goals for joint, coordinated efforts by Canada, the US and Mexico on each of these matters.  This blog provides some highlights from the Statement on each subject matter.

Advance clean and secure power

The Statement indicates a commitment to advancing clean energy and North American integration of energy resources.  This includes the development of cross-border transmission projects and broad energy systems integration.  It also includes strengthening the reliability, resilience and security of the North American energy grid.

As a concrete goal, the countries commit to achieving 50% clean power generation by 2025 (clean power includes renewables, nuclear, and carbon capture and storage technologies).  This is complimented by a commitment to reduce demand through improved energy efficiency.

Drive down short-lived climate pollutants

The focus of this commitment is the reduction of methane, black carbon (soot) and hydrofluorocarbon emissions.  With respect to methane, there is a concrete goal of reducing emissions from the oil and gas industry by 40% to 45% by 2025. The countries agree to develop national methane strategies and to implement federal regulations for existing and new sources of methane as soon as possible to achieve the target.  As well, steps will be taken to reduce methane emissions from landfills and the agriculture sector.

With respect to black carbon emissions, the countries aim to reduce the emissions from industry and agriculture through technical support and information-sharing on best practices, strategies and methodologies.  In addition, there is a commitment to reduce black carbon from new heavy-duty diesel fuel vehicles to near zero levels continent-wide by implementing aligned, world-class, ultra low-sulphur diesel fuel and HDV exhaust air pollutant standards by 2018.

With respect to hydrofluorocarbons, the countries propose to adopt a Montreal Protocol hydrofluorocarbons phase-down amendment in 2016.

Promote clean and efficient transportation

The Statement contains a trilateral commitment to reduce energy consumption, and GHG and air pollutant emissions from motor vehicles. In addition, there are commitments to reduce maritime shipping emissions and international aviation emissions.  The countries also commit to support the implementation of green freight practices.

Protect nature and advance science

The Statement indicates that the countries will take actions designed to mainstream conservation and sustainable use of biodiversity across diverse sectors.  In so doing, they will foster the incorporation of traditional knowledge and gender responsiveness.  In addition, the countries commit to protect migratory species, strengthen cooperation on invasive alien species, and to combat wildlife trafficking.  The countries will enhance their cooperation on ocean management.

Show global leadership in addressing climate change

In order to become global leaders in climate change action, the countries commit to enhance their domestic adaptation efforts and resilience to climate change.  By phasing out fossil fuel subsidies by 2025 and imposing stringent domestic regulations on fuel efficiency, the countries hope to encourage robust action by the other G-20 countries.  As well, the countries propose to become global leaders by promoting a secure, affordable, accessible and clean energy future and by promoting a just transition to a clean energy economy.

We are encouraged by the commitment to a coordinated approach to climate change by Canada, the US and Mexico. However, with the exception of reducing methane emissions by 40% to 45% and achieving 50% clean energy production by 2025, the Statement provides little in the way of concrete goals.  We need strong federal leadership in Canada to address climate change and to achieve the commitments made in the COP Paris Agreement (see previous post).  This includes concrete measures for the reduction of GHG emissions, for the improvement of resilience and adaption to the impacts of climate change, and for a just transition to a green economy.

The ongoing review of Alberta’s Municipal Government Act (MGA), along with the proposed amendments introduced in  Bill 21 this spring, presents a vital opportunity to enable municipal environmental governance.  In its current form Bill 21 provides several steps forward in environmental management, including (but not limited too):

  • A preamble that acknowledges that “Alberta’s municipalities play an important role in Alberta’s economic, environmental and social prosperity today and in the future”;
  • The need for adjoining municipalities to undertake coordinated planning which must address “environmental matters within the area, either generally or specifically”(s.631, intermunicipal development plans); and
  • Clarity around the use of brownfield tax incentives (s.364.1);

However, a new MGA must go further to address an ongoing gap in environmental management in the province.   Minding this environmental gap means addressing both real and perceived jurisdictional, financial and enforcement constraints on municipal environmental management.

To this end, the ELC proposes that a new MGA include:

  • A clear articulation of jurisdiction over land and water within the municipality (both in the development of statutory plans and in bylaws). For example, s. 640 which deals with municipal land use bylaws should be amended to include a section allowing “the development of land, construction of buildings or infrastructure, maintenance, excavation or reclamation of land for the purpose of managing the environment in a manner the municipality deems appropriate”.
  • A clear nesting of environmental management efforts among municipal, provincial, federal and Indigenous roles, in order for all levels of government to excel in environmental management. The MGA should provide explicit guidance in this regard.
  • Additional funding mechanisms to deal with conservation planning, environmental assessment, monitoring and management. We note that Bill 21 contains amendments to “off-set levies” which could have provided a mechanism (albeit less than ideal) to address this issue.
  • Clear municipal enforcement powers to manage pollution within the municipality.
  • Clear municipal jurisdiction to require actions for the mitigation and adaption to climate change risks.

For more details, see the ELC’s earlier submissions on the MGA.

–Still “in the gap” with Bill 21

Those familiar with Bill 21 will note I haven’t listed the new conservation reserve as a mechanism to be lauded in the new legislation.  Bill 21 enables the taking of land as a conservation reserve during subdivision for the preservation of “environmentally significant features”.  This requires that the municipalities pay fair market value for the reserve. As first blush, this mechanism seems to meet the conservation objectives of the municipality; however, two major concerns arise.

  1. Conservation reserves may create the perception within municipalities and with developers that this is the “go-to” option for non-environmental reserve related land management even though land use bylaws may be equally or better suited to reaching municipal environmental and conservation outcomes. In effect, the provision may result in moving municipalities away from valid land use regulation toward a system of managing “environmentally significant features” by land acquisition.  This potential pigeonholing of municipal environmental governance must be avoided. (For more information about how environmental reserve may be used see s.664 of the MGA .)
  2. It requires payment of fair market value (not in itself a bad thing) without creating a financial mechanism to cover the costs of purchasing, monitoring and maintaining the conservation reserve. This creates financial pressures around conservation reserve with a potential (and undesirable) “find money or lose it” result.

 

Interestingly, the Alberta Land Stewardship Act (ALSA) was amended in 2011 to clarify (purportedly) compensation rights for the impacts of provincial regional plans on private property.  This provision expressly excludes claims for compensation arising from municipal planning decisions under the MGA (ALSA, section 19.1(9) ).  In other words, Bill 21 is creating potential claims for compensation in the same situation where previous government policy and legislation has previously declined to do so.

The Government of Canada announced today that it will be pursuing consultation on federal environmental regulations, namely:

  • Reviewing federal environmental assessment processes;

  • Modernizing the National Energy Board; and

  • Restoring lost protections and introducing modern safeguards to the Fisheries Act and the Navigation Protection Act.

The government website describes each consultation process and provides initial opportunities to comment on two draft terms of reference regarding federal environmental assessment and modernization of the NEB.

The ELC looks forward to engaging the government to see this suite of environmental laws changed to better protect Canada’s environment.   This presents an important opportunity to leave past criticism in the past and to realize a renewed commitment to core environmental law principles.

 

For other past posts of relevance see:

 

As part of our ongoing work on Market-Based Instruments, the Environmental Law Centre is pleased to introduce two new backgrounders to assist in understanding and implementing these tools.

Property Law: Market-Based Instruments and the Alberta Land Stewardship Act

Market-based instruments (MBIs) depend on the existence of property. For markets to attract sufficient participation, buyers and sellers need a sense of security which comes from clarity of property rights. Property rights need to be well defined and governed by rules for their creation, enforcement and termination. Unclear or inadequate property rights can discourage investment, and create need for additional legal protections in the form of contracts or regulations.

To view or download this backgrounder, click here: MBI Property Rights Backgrounder June 2016

Advanced Property Rights: Market-Based Instruments and Public Lands

This is a companion piece to our brief on Property Law and MBIs which looked at general legal issues associated with property that may be triggered with the use of MBIs. This brief looks at specific property law that may arise in some circumstances, including public lands and resources, separation of surface and subsurface rights, and Indigenous rights.

To view or download this backgrounder, click here: MBI Advanced Property Rights Backgrounder June 2016

This is the eighth post in the Environmental Law Centre’s new blog series exploring climate change law in Canada. This blog series provides updates on climate change law developments and includes insights from our related law reform research. This blog series is generously funded by the Alberta Law Foundation.

 

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The Pipeline Safety Act (the “PSA”) received royal assent last year and will come into force on June 19, 2016.   The PSA makes several amendments to the National Energy Board Act (the “NEB Act”) and the Canada Oil and Gas Operations Act (the “COGOA”).  The goal of these amendments is to strengthen the polluter pays principle as it relates to federally regulated pipelines.

 

The PSA amendments to the NEB Act include a statement of purpose that the new provisions will “reinforce the “polluter pays” principle by, among other things, imposing financial requirements on any company that is authorized under this Act to construct or operate a pipeline” (s. 48.11).   With the PSA amendments, the NEB Act imposes absolute liability on companies for uncontrolled releases from their pipelines (s.48.12).  In other words, a company is liable for uncontrolled releases with no need for proof of fault or negligence.

 

The liability limit for a company that transports 250,000 barrels of oil per day is $1 billion (although this can be raised by regulation).  For all other companies, the liability limit is to be set by regulation (which is still forthcoming).  Where a company is found to be at fault or negligent, there is no limit to liability.  Companies are liable for loss and damages caused by the release, the costs and expenses of responding to the release, and the loss of the non-use value of public resources.   In addition, the Board may direct a company to reimburse a federal, municipal or provincial government, an Aboriginal governing body, or any person for any reasonable expenses in taking reasonable steps to deal with the release even if those expenses exceed the liability limit (s. 48.15).

 

In addition to expanded liability provisions, the PSA amendments set financial requirements for companies operating pipelines (s. 48.13).  A company must maintain financial resources to pay the amount of liability that applies to it either by the Act or by order of the Board.  The company must be able, at the Board’s request, to demonstrate it has sufficient financial capacity.  The Board may consider the company’s financial statements, letters of credit, guarantees, bonds or suretyships and insurance.

 

If an uncontrolled release occurs and the Board is of the opinion that a company lacks financial capacity or has failed to comply with a Board order, then that company may be designated (s. 48.16).  Essentially, this means that the Board can take necessary actions to deal with the release and to reimburse expenses incurred by third parties.  A significant amendment is that the amounts paid by the Board may be recovered by imposing fees on those regulated companies that transport the same commodity as was uncontrollably released (s. 48.17).  Such fees are to be imposed by regulations (which would also prescribe the method of calculation and payment of fees).  In the case where a designation is made, a Pipeline Claims Tribunal may be established to examine and adjudicate claims for compensation associated with the uncontrolled release (ss. 48.18 to 48.48).

 

The PSA also makes amendments to the NEB Act and the COGOA with regard to abandonment of regulated pipelines.  An abandoned pipeline is defined as a pipeline that has received an abandonment certificate and remains in place (s. 2 COGOA).  Under the amended NEB Act, the Board may order a company to take any measures, including maintaining financial resources, to ensure it can pay for the abandonment of its pipelines and for expenses related to its abandoned pipelines (s. 48.49).  In addition, the Board may impose other terms and conditions it considers proper when issuing an abandonment order (s. 4.01(2.1) COGOA).  The Board will now retain jurisdiction over abandoned pipelines (prior to the PSA, the Board lost jurisdiction once an abandonment order was issued).

 

Finally, the PSA includes provisions designed to prevent damage to pipelines.  For example, it is prohibited for any person to construct a facility across, on, along or under a pipeline or engage in an activity that causes a ground disturbance unless expressly permitted by regulation or Board order (s. 112).  As well, there is a prohibition against operation of a vehicle or mobile equipment across pipelines unless permitted by regulation, Board order, or within the travelled portion of a highway or public road (s. 112).

 

The ELC is encouraged to see more stringent financial responsibility placed onto companies operating pipelines and stronger adherence to the polluter pays principle.  These is especially timely as large-scale interprovincial pipelines are squarely within the public’s attention in the last few years with the proposed Northern Gateway (see previous post here), Trans Mountain and Energy East pipeline projects.  The potential human and environmental impacts associated with potential failure of such pipelines are certainly paramount in the public’s mind.   These changes may go some way in addressing the financial impacts of uncontrolled releases.  However, it should be kept in mind that these projects also bring concerns with greenhouse gas emissions, habitat disturbances and other potential environmental impacts which cannot be addressed with enhanced financial capacity.  Many of these concerns can only be addressed through thoughtful planning and design that considers cumulative impacts, as well as, the imposition of legally enforceable conditions (and perhaps the occasional NO).

This is the seventh post in the Environmental Law Centre’s new blog series exploring climate change law in Canada. This blog series provides updates on climate change law developments and includes insights from our related law reform research. This blog series is generously funded by the Alberta Law Foundation.

 

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A carbon tax was first recommended by the Alberta Government’s Climate Leadership Plan as one of several tools to reduce greenhouse gases (GHG) by putting a price on carbon emissions (see our previous post on the Climate Leadership Plan here). In April 2016, the Alberta Government announced its fiscal plan for 2016 to 2019 (Budget 2016) and there provided first information on the carbon tax. See ELC’s previous blog on Alberta’s carbon tax here.

On May 24, 2016, Alberta’s Minister of the Environment introduced Bill 20 which, if passed, will enact both the Climate Leadership Act and the Energy Efficiency Alberta Act. With Bill 20, Alberta’s controversial new carbon tax will be implemented and a new agency called Energy Efficiency Alberta will be established. This blog briefly reviews these two matters: the carbon tax and the Energy Efficiency Alberta Agency.

 

Climate Leadership Act

Schedule 1 of Bill 20 contains the Climate Leadership Act (CLA). The purpose of the CLA is to implement a carbon tax (officially referred to as carbon levy) on fuel consumption throughout the fuel supply chain. The CLA stipulates that the revenues from the carbon tax are to be used for GHG reduction initiatives in Alberta and to provide tax credits or tax rate reductions to carbon tax affected consumers, businesses and communities.

The CLA defines a “consumer” as “a person that produces or purchases fuel in, or imports fuel into, Alberta (i) for use by that person, (ii) for use by another person at the first person’s expense, or (iii) on behalf of, or as agent for, a principal for use by the principal or by another person at the principal’s expense.”

The CLA imposes a carbon tax on different types of fuel. There are special provisions on some fuel types such as locomotive diesel (section 6), natural gas (section 8), miscellaneous fuels, such as coke oven gas, refinery gas, low and high heat value coal, refinery petroleum coke, upgrader petroleum coke, and coal coke (section 9). Some fuel types are exempted from the application of the carbon tax by regulations. Recipients of fuel must pay the carbon tax to the Crown. The tax rate is determined according to the fuel type (see the Table of Schedule 1).

The following activities trigger the imposition of the carbon tax (for the full list see CLA, s 4(2)):

  • purchase of fuel,
  • import of fuel into Alberta,
  • sale or removal of fuel from a variety of industrial facilities such as oil production site or oil sands processing plant or from a specified gas emitter;
  • flaring and venting of fuel.

But not all these activities will be immediately taxed. Section 4(3) of the CLA stipulates when the carbon tax is not payable. For example, the carbon tax is not payable at the time when the fuel is imported into Alberta for delivery to a refinery or terminal; or fuel is exported from Alberta in bulk.

There are exemptions (section 15 of the CLA) from paying the carbon tax in the following cases:

  • the consumer holds at the time of purchase a valid carbon tax exemption certificate or other prescribed evidence of exemption and the fuel is intended for a prescribed purpose or use;
  • the fuel is marked fuel that is used for farming operations; or
  • the fuel is not put into a fuel system that produces heat or energy, and is not flared or vented.

Although aviation gas or aviation jet fuel is exempt from the carbon levy, the consumer must pay carbon tax on aviation gas or aviation jet fuel used for any flight or segment of a flight that began at a location in Alberta and arrived at a location in Alberta, regardless of where the fuel was purchased. However, no carbon tax is payable on aviation gas or aviation jet fuel used by a recipient for a flight or segment of a flight (a) that departs from a location in Alberta if the first scheduled arrival on the flight is located outside of Alberta and the flight is made for a commercial purpose, or (b) that arrives at a location in Alberta if the flight is arriving from a location outside of Alberta.

If a consumer is exempted from the payment of the carbon tax, he can file an application to the Minister to receive a carbon tax exemption certificate that identifies the consumer as a person exempt from the carbon tax.

Section 25(1) of the CLA enumerates a comprehensive list of all direct remitters. A direct remitter is a person such as, but not limited to:

  • that sells or remove fuel from a refinery;
  • that sells or removes fuel from a terminal;
  • that manufactures, refines or acquires in, or imports into, Alberta not less than a total of 500 million litres of clear fuel annually;
  • that imports fuel into Alberta for the purpose of sale or resale;
  • that flares or vents fuel;
  • that produces, processes or refines fuel;
  • that rebrands fuel;
  • that sells or removes natural gas from a natural gas distribution system.

Depending on the status as direct remitter, remitter or other, the CLA determines who pays the carbon tax to the Minister or to the person that supplied the recipient with the fuel (see section 25 of CLA).

The CLA (section 27) requires specified and listed activities to register first before they are carried out. These activities are for example, in Alberta: to produce, process or refine fuel, sell or remove fuel from a gas fractionation plant, sell or remove fuel from a specified gas emitter, flaring and venting fuel, sell or remove natural gas from a transmission pipeline, sell or remove natural gas from a natural gas distribution system, etc.; to import fuel into Alberta for sale or resale; to export fuel form Alberta in bulk; use locomotive diesel in Alberta.

The CLA comes into force on January 1, 2017.

 

Energy Efficiency Alberta Act

Schedule 2 of Bill 20 enacts the Energy Efficiency Alberta Act (EEAA). The central matter of the EEAA is to establish the Crown-owned corporation called Energy Efficiency Alberta (EAA). The mandate of EEA is to raise awareness among energy consumers of energy use and the associated economic and environmental consequences. Further, EEA aims to promote, design and deliver programs and carry out other activities related to energy efficiency, energy conservation and the development of micro-generation and small scale energy systems in Alberta. In addition, EEA intends to promote the development of an energy efficiency services industry. The EEA is for all purposes an agent of the Crown in right of Alberta. The remainder of the fairly short Energy Efficiency Alberta Act deals with aspects of a corporation such management and administration.

 

Consequential Amendments of other Acts

Bill 20 amends the following acts: the Alberta Corporate Tax Act, the Alberta Personal Income Tax Act and the Climate Change and Emissions Management Act. Bill 20 and the consequential amendments to other acts implement the Alberta’s carbon tax, the rebates to low and middle income Albertans, and the reduced income tax rates for small businesses.

 

Bill 20: Another Step towards the Implementation of the Climate Leadership Plan

The enactment of Bill 20 shortly followed the announcement of the carbon tax in Alberta’s Budget 2016. The Climate Leadership Act will implement Alberta’s laudable but controversial carbon tax (see our previous comments on Alberta’s carbon tax here). However, the administration of the carbon tax may prove a daunting task in the year ahead. Similarly, the establishment of Energy Efficiency Alberta, a new agency mandated with raising awareness and promoting energy efficiency, seems a promising step towards the fight against climate change but the effectiveness of this agency in carrying out its task remains to be seen. Both, the carbon tax and the promotion of energy conservation are important parts of Alberta’s Climate Leadership Plan. However, Alberta’s Government has committed to do more than this. The other major measures announced in the plan are yet to come:

  • phasing out coal-generated electricity and developing more renewable energy,
  • legislating an oil-sands emissions limit, and
  • employing a new methane emission reduction plan.

 

This is the sixth post in the Environmental Law Centre’s new blog series exploring climate change law in Canada. This blog series will provide updates on climate change law developments and will include insights from our related law reform research. This blog series is generously funded by the Alberta Law Foundation.

 

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In April 2016, the Alberta Government announced its fiscal plan for 2016 to 2019 (Budget 2016). Information on the much-anticipated and feared carbon tax (or levy as it’s called in Budget 2016) is provided by Budget 2016 (pages 5-6, 93-98). However, there is only a general outline of the tax with details still to come. The impact and effectiveness of Alberta’s carbon tax can only be completely assessed once those details are provided.

 

The carbon tax was first recommended by the Alberta Government’s Climate Leadership Plan as one of several tools to reduce greenhouse gases (GHG) by putting a price on carbon emissions (see our previous post on the Climate Leadership Plan here). Budget 2016 sets out the carbon price at $20/tonne as of January 1, 2017 and $30/tonne as of January 1, 2018. Currently, there are no plans to increase the level of the carbon tax beyond $30/tonne but this may change with improvements to the economy.

 

The Alberta Government expects to raise revenues from the carbon tax in the range of $274 million in 2016/2017, $1.2 billion in 2017/2018 and $1.7 billion by 2018/2019. The intention is to invest revenues from the carbon tax back into the Alberta economy. In particular, carbon tax revenues will be invested into green projects such as green infrastructure (public transport), energy efficiency, renewable energy, bioenergy, and innovation and technology.

The government intends to mitigate the financial impact of the carbon tax using rebates and a reduction of small business taxes. Eligible low and middle income Albertans will receive an annual non-taxable and refundable rebate ranging from $100 to $400. It is expected that the total rebates will range from $95 million in 2016/2017 to $590 million by 2018/2019. Small businesses will receive a reduced income tax rate commencing January 1, 2017 (from 3% to 2%).

 

Application of the Carbon Tax

The tax will be imposed on purchases of all fossil fuels that produce GHG emissions when combusted, such as transportation and heating fuels. Each fuel type will be taxed according to the amount of GHG emissions released when combusted.

Exemptions to the Carbon Tax

The tax does not apply directly to consumer purchases of electricity. There are further exemptions from the carbon tax for natural gas produced and consumed on site, marked gasoline and diesel for farming purposes, biofuels, inter-jurisdictional flights, indigenous use and fuel sold for export.

Because large final emitters are already subject to the carbon pricing mechanism imposed by the Specified Gas Emitters Regulation (SGER), they will be exempt from the carbon tax in order to avoid double taxation. The precise details of the interaction between the carbon tax and the SGER will be announced later.

 

The Carbon Tax is not the only Carbon Price in Alberta

While the carbon tax is new to Alberta, it is just an addition to the province’s existing carbon pricing scheme. In 2007, Alberta was the first jurisdiction in North America to put a price on carbon. Alberta’s SGER regulates large final emitters with an output of 100,000 tonnes carbon per year. Under SGER, emitters have to pay compliance costs when they exceed their individual ‘net emissions intensity’.

The regulatory scheme established by the SGER is currently under review but the details of proposed changes are not public yet. However, according to Budget 2016, the SGER will adopt new product and sector-based performance standards. As well, as of January 1, 2016, large final emitters must pay $20 per tonne of GHG emissions, increasing to. $30 per tonne as of January 1, 2017.

In combination, the new carbon tax and carbon pricing under the SGER will cover 78% to 90% of Alberta’s GHG emissions. Budget 2016 also makes very clear that both tools work together and that fuel users will not be charged twice on the same emissions.

The government expects $9.6 billion in gross revenue from compliance payments from large final emitters and the carbon tax in combination. The table below illustrates high-level revenue expectations.

 

Millions CAD 2016-17 2017-18 2018-19 2019-20 2020-21 5 year total
SGER/ Compliance Payments 101 146 917 899 758 2,821
Carbon Tax 274 1,247 1,709 1,751 1,796 6,777
Gross Revenue 375 1,393 2,626 2,650 2,554 9,598

Table source: Budget 2016, page 6

 

Will the Carbon Tax Work?

It remains to be seen how effective Alberta’s carbon tax will be at reducing GHG emissions. Based upon the limited information provided in Budget 2016, several questions relating to the efficacy of the carbon tax arise.

Firstly, the Alberta Government aims to change the behaviour of Albertans by introducing the carbon tax. Albertans will be encouraged to use less fossil fuels and to implement energy-saving measures in their households and daily routine. However, given that the Pembina Institute predicts that 60% of Albertans will not have to pay additional costs in light of the rebate program, that matter raises the question of the viability of the carbon tax incenting behavioural change for most people.

Secondly, another question arises in respect of the projected revenues as set out in the table above. Majority of revenues from the carbon pricing tools will come from the carbon tax. In fact, the revenue from the carbon tax is almost triple the amount of revenue generated from payment by large final emitters under the SGER. That raises the questions of which emitters and to what extent they are contributing to GHG emissions in Alberta? Will the polluter-pays principle be effectively implemented with Alberta’s carbon pricing regime?

Finally, there are questions around what the Alberta Government expects in terms of emission reductions resulting from the carbon tax. The only available official information on the carbon tax come from Budget 2016. Unsurprisingly, this means that the focus is on the fiscal aspects of the tax. The questions remain as to which sectors and what amount of GHG emissions will be subject to the carbon tax?

Currently, the oil and gas sector is responsible for 46% of Alberta’s emissions, followed by electricity generation accounting for 17%, transportation for 11%, agriculture, forestry and waste for 9%, other industry, manufacturing and construction for 9% and buildings and homes for 8%.

 

AB carbon tax_blog_chart.jpg

Chart source: Alberta Government

 

At first sight, it appears that the SGER scheme will generate significantly less revenue when compared to the carbon tax. On the other hand, large final emitters under the SGER may be responsible for the largest contribution to GHG emissions in the province. This means that the sectors that contribute less to GHG emissions are making more significant financial contributions through the carbon tax.

While this is of some concern, it may be that this is not actually the case. There are still too many uncertain factors. For example, as discussed above, the exact relationship between the carbon tax and the SGER still has to be worked out. After amendments of the SGER and the release of the carbon tax law, conclusions can be hopefully reached with more certainty.

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