This week we heard that Alberta Premier Alison Redford is considering increasing the price of carbon in Alberta by imposing a limit on tar-sands emissions and a $40-per-tonne-tax on production above that limit. Good for her. What we know from other jurisdictions is that putting a price on pollution spurs innovation, creates certainty and can provide billions of dollars for the development of needed alternatives – renewable energy, efficiency programs, electric-vehicle infrastructure and public transit. Most importantly it works to reduce the greenhouse gas emissions that are already degrading our life-support systems.
Let’s be clear: Canada's biggest barrier to meeting its climate targets is the tar sands. In fact, despite the best efforts of Canadians across the country to take public transit and insulate their homes, pollution growth in the tar sands swamps all these gains. However, if we froze emissions from the oil sands we could get on track. Canadians should measure proposal like Redford’s “40:40” – referring to a 40 per cent cut in the carbon-emission limit and a $40-per-ton tax on production above that limit – by whether overall emissions will actually stop growing. From the information available so far, it does not look like that will happen. While the $40-per-tonne number sounds high, when you factor in the 40 per cent intensity target, the carbon price ends up more like $15 a tonne (if industry estimates of a $2-per-barrel increase are correct). In comparison, British Columbia has a carbon tax of $30 per tonne (it brings in $1.2-billion in revenue), while Norway has a tax of over $70.
The reality is that you don’t really open up many more opportunities for innovation and reduction with anything under $40 per tonne. In order to truly change the economic playing field in favour of clean energy, it needs to progress to $100 or $150 over the next decade so that big investments such as carbon capture and storage start making sense economically. Currently, they don’t.
A recent study by Adam Brandt of the Stanford University School of Earth Sciences notes that at $40 we can expect no more than one additional carbon-capture project in the oil sands, capturing 1.6 megatonnes of carbon. Climate pollution from oil sands production is projected to hit 104 megatonnes of carbon by 2020. That is twice current emissions from Norway or Bangladesh -- and exceeds the combined emissions from 85 nations.
The industry is already responding with concern to the proposal. It’s too expensive. We won’t be competitive. Baloney. These are the most profitable companies on the planet, and they’re used to treating the atmosphere as their free dumping ground. They can not only afford a higher tax, but our climate security demands one.
The fact that Royal Dutch Shell already uses a ‘shadow price’ of $40 a tonne because they have been expecting carbon regulations for years and couldn’t live with uncertainty is proof of that. Look no further than Norway’s profitable and competitive industry for further proof.
We need to stop kowtowing to the oil industry and design policies that benefit people and not polluters. Ms. Redford needs to propose a carbon price that actually leads to overall emissions reductions so that the oil industry takes on its share of Canadian emissions reductions, just like everyone else does.
If what Ms. Redford is trying to do is set a more sustainable course and secure her province’s reputational capital and market access, then she is going to need to stand up to the industry and go for something closer to $100 a tonne. With that, we might have a chance of meeting our climate targets.
Would the industry complain? Of course they would: they have a vested interest in maintaining the status quo. They are making billions from destroying our atmosphere.
But their bark is worse than their bite. Companies can threaten to leave, like they always do, but the reality is that they are here because the oil is here and not someplace else. They’ll stick around, because they have to.
Tzeporah Berman, a former head of Greenpeace International’s worldwide climate campaign and a co-founder of ForestEthics, has been leading environmental campaigns in Canada and internationally for over 20 years. She is the author of This Crazy Time: Living Our Environmental Challenge.