Alberta Premier Jason Kenney unveiled a climate strategy on Tuesday to levy a $30-a-tonne carbon tax on heavy emitters starting on Jan. 1, 2020.JASON FRANSON/The Canadian Press
Ottawa will decide by year’s end whether Alberta and Ontario can apply their own carbon-pricing plans to industrial emitters, as those provinces pitch carbon taxes that some critics say fall short of the federal government’s system.
Alberta Premier Jason Kenney unveiled a climate strategy on Tuesday to levy a $30-a-tonne carbon tax on heavy emitters starting on Jan. 1, 2020. If Ottawa accepts it, Alberta’s carbon tax would eventually cover nearly two-thirds of emissions in the province, which is Canada’s largest emitter of greenhouse gases.
Ottawa has said it will review Alberta’s system to see if it complies with the federal requirements.
Environment Minister Catherine McKenna’s spokesperson Caroline Thériault said the review of the Alberta and Ontario systems would happen later this fall. If Ottawa concludes Alberta’s doesn’t fit the national requirements, Ms. Thériault said, the federal industrial carbon tax, called an output-based pricing system, would take effect on Jan. 1. That is the date the federal carbon tax covering consumers is to take effect in Alberta. Both taxes are already in effect in Ontario.
Mr. Kenney’s plan, known as a technology-innovation and emissions-reduction (TIER) system, would replace a similar industry tax created by his New Democrat predecessor, Rachel Notley, that Ottawa had approved.
Mr. Kenney’s plan would reduce the province’s expected emissions by 32 megatonnes by 2030, according to data the province released on Wednesday. Ms. Notley’s climate strategy, which also included a carbon tax on consumers and a purchase of renewable energy, was expected to reduce emissions by 39 megatonnes by 2030.
While Mr. Kenney’s plan does not go as far as his predecessor’s, Saskatchewan’s system received approval from Ottawa although it also does not meet the federal standards.
The federal carbon-pricing plan for industry also applies in New Brunswick, Manitoba, Prince Edward Island and two sectors in Saskatchewan.
Saskatchewan Premier Scott Moe said Ottawa accepted his province’s plan “as is.” The province’s industrial carbon price will also increase by $10 per tonne annually until 2022, in line with Ottawa’s increases.
Because of the amount of Alberta’s emissions, the federal government will need to look carefully at where Alberta’s proposal differs from its own, said Andrew Leach, an energy and environmental economist at the University of Alberta.
“Alberta is the largest-emitting province, and what happens in Alberta matters a lot more for national emissions than any other province,” he said.
In July, Ontario submitted its own proposal for an industrial carbon tax in the hopes of ditching the federal model. Environment Minister Jeff Yurek told reporters in Toronto on Wednesday that Ottawa has not yet said whether the proposal is stringent enough.
The system is “almost the same” as Alberta’s, Mr. Yurek said. However, he said that Ontario’s proposal has a more aggressive carbon tax. The province says it would start at $20 a tonne of emissions this year, and rise by $10 a year to $50 in 2022.
Ontario’s proposal also appears more stringent than the one proposed by Alberta because it matches Ottawa’s requirement that the carbon tax apply to any company emitting more than 50,000 tonnes a year. Alberta’s plan would only apply at 100,000 tonnes a year. Facilities below that threshold could opt-in to the province’s system or pay the federal carbon tax.
Greenpeace Canada’s Keith Stewart said Ontario’s proposal is weaker than Ottawa’s current standard because it would apply to a lower percentage of emissions. He said the provinces appear to be trying to create systems that are weaker than Ottawa’s but will still be approved.
“There’s a long history in Canada of provinces seeking equivalency agreements with the federal government that are less stringent than the federal rules,” he said.
For example, Saskatchewan’s carbon tax for industrial emitters was in large part approved even though Mr. Stewart said it’s “weaker” than the federal system. The federal tax still applies to the province’s electricity and natural gas transmission pipeline sectors.
Alberta Environment Minister Jason Nixon said on Wednesday that the TIER program will reduce carbon emissions to the tune of 57 megatonnes a year by 2030, 25 of which will come through technology improvements.
With a report from Laura Stone in Toronto