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Moving off the sidelines Ontario, Quebec, Canada’s industrial provinces, ready to join cap-and-trade emissions market; Alberta won’t join; feds promise plan Gary Park For Petroleum News
Canada’s industrial heartland - the provinces of Ontario and Quebec - have joined British Columbia in making an end-run around a sluggish federal government and deciding to put a price on carbon emissions.
But Alberta, the largest provincial contributor to greenhouse gas emissions, is giving no indication that it is willing to move beyond its 2007 carbon levy on major emitters by joining Ontario and Quebec in a cap-and-trade system.
The Canadian government’s position is even less clear now that it has failed to submit new carbon emissions reduction targets to the United Nations by a March 31 deadline.
After years of procrastinating, other than rejecting cap-and-trade as a threat to Canada’s oil and natural gas production, the government of Prime Minister Stephen Harper has made a fresh pledge.
Harper said April 11 he will unveil targets for GHGs before a G7 meeting in June and ahead of a pivotal UN climate summit in Paris before Christmas.
The federal government on April 13 chastised Canada’s 10 provincial governments for not meeting their own targets to reduce GHGs - a strategy that was quickly condemned as a brazen move by Harper to deflect attention from his own administration’s failure to meet its 2020 targets or to produce anything approaching a national policy.
Provinces jump in Amid the continuing confusion, the premiers of Ontario (Kathleen Wynne) and Quebec (Philippe Couillard) joined forces April 13 in the world of cap-and-trade, upstaging an April 14 Climate Summit of the provinces and three territories.
When Wynne announced her province was joining Quebec and California by introducing a carbon price, she defied the Harper government which has lampooned cap-and-trade as a “job-killing tax.”
“We oppose carbon taxes and any schemes that seek to raise revenue - either directly or indirectly - from hardworking Canadians,” said a spokesman for federal Environment Minister Leona Aglukkaq - a stance that Liberal party environmental spokesman John McKay described as “juvenile drivel.”
But Wynne was not about to waver. “Call it carbon pricing, cap-and-trade, a market mechanism, or ... if you must, go ahead and call it a tax,” she said. “Most of us will not be fooled because for most of us the label is not important. What’s important is that we make progress.
“My hope is that at some point the federal government will work on a process that will support what the provinces are doing. I believe that having a federal partner who is not standing on the sidelines, but is engaged in the discussion will help.”
Couillard said climate action is likely to be a theme in the federal election campaign, expected in October, arguing it is incumbent on Canada, as an oil-producing nation, to act.
Prentice in tight race Alberta Premier Jim Prentice was unable to attend the Climate Summit. He is engaged in a tight three-way fight with the New Democratic Party and Wildrose leading to a provincial election on May 5, which could see his governing Conservative party defeated after 12 consecutive victories and 44 years in power.
During a campaign stop in Calgary, Prentice said “cap-and-trade is not something that I support or that I think is in the best interests of Alberta,” although he pledged that Alberta will remain a “constructive ally” of the other provinces in working on climate change measures.
The pressure on Alberta to take a more aggressive role intensified in a report issued earlier in April by Canada’s EcoFiscal Commission, a group of economists, who are campaigning for a federal carbon tax.
They estimate that even if the federal government will not lead the way, the costs of applying different carbon pricing regimes in the provinces and territories would amount to only 0.4 percent of gross domestic product, or C$8 billion of a C$2 trillion national economy.
Levy high enough? Alberta has taken pride in proclaiming that it is showing the way to North American petroleum-producing jurisdictions by imposing a C$15 per metric ton carbon levy on the largest greenhouse gas emitters who exceed a minimum target.
But Chris Ragan, chairman of the EcoFiscal Commission, said the Alberta regulation is not changing behavior because it is not high enough and doesn’t cast a wide enough net.
He said a carbon tax would “increase the price of carbon-intensive products, which is what it is supposed to do.”
In 2012, Alberta accounted for 17.5 percent of Canada’s GDP, 11.2 percent of the country’s population and 37.5 percent of national GHG emissions, which are projected to increase by another 20 percent by 2020 as oil sands production grows.
In contrast, Ontario has 38.6 percent of Canada’s population and accounts for 38.7 percent of GDP and 23.9 percent of GHG emissions.
Oil sands energy intensive The energy intensive requirements of oil sands development account for 27 percent of Alberta’s GHGs, followed by 14 percent from coal-fired power plants, while Ontario derives its electricity from nuclear and hydro plants.
According to the EFC report, the across-the-board average cost of Alberta’s carbon levy is a mere 77 cents per metric ton, not the C$15 the government is fond of quoting.
In contrast, British Columbia collects C$30 per metric ton through 7 cents per liter of gasoline, while the Quebec and Ontario cap-and-trade programs would charge an expected C$11 per metric ton.
British Columbia captures C$1.2 billion per year from its tax, Quebec expects to bring in C$425 million and Alberta collects C$55 million.
Ontario’s industrial sector is left to ponder the threats and opportunities of that province’s cap-and-trade plan until Wynne finalizes key details later this year.
The battered manufacturing sector - like the petroleum sector in Western Canada - wants to make sure the regulations don’t result in new competitive pressures, although clean-tech industries which specialize in energy-efficient technologies and low-carbon fuel alternatives are hoping they will benefit from market incentives to develop new customers.
If Ontario follows the lead of its future partners, Quebec and California, it will issue free emission allowances to industries such as refining and cement to protect investment and jobs in U.S. states and Canadian provinces that don’t have carbon pricing.
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