Industrial carbon taxes proposed by the conservative-run governments of Ontario, Alberta and New Brunswick are weaker than the federal government’s carbon pricing system, according a new analysis by the Calgary-based Pembina Institute, a green-energy think tank.
The three governments, whose premiers have campaigned for years against carbon taxes, have pitched their own forms of industrial carbon-pricing. All three proposals require approval from Ottawa. According to Pembina’s report, Alberta’s system is the only one that could meet federal standard – if the province is prepared to increase the price.
Isabelle Turcotte, a researcher for Pembina who helped write the report, said that while the system recently announced by Alberta’s United Conservative government is only marginally weaker than the one it would replace, the proposals from Ontario and New Brunswick would allow significantly increased emissions than would be permitted under the federal carbon tax.
Officials from the federal government and each of the provinces are in talks, clarifying how the proposals would work. At the end of negotiations, each of the systems could be adopted in whole, rejected or partly implemented.
“The political context of these negotiations is very delicate right now with Alberta and I think the real challenge for Canadians and the federal government moving forward is reunifying the country,” Ms. Turcotte said of the political climate since the Oct. 21 election, when the federal Liberals were shut out of Alberta and Saskatchewan.She added: “It’s important that all provinces are treated fairly and equally. They should all be doing their fair share.”
The three proposed industrial carbon taxes would have no effect on the federal requirement for a carbon price on consumers.
Alberta Premier Jason Kenney calls carbon taxes “cash grabs” and has repeatedly said over the past year that “the carbon tax is all economic pain and no environmental gain.” His government, along with that of Ontario Premier Doug Ford, has promised to continue fighting the consumer carbon tax in court.
Many economists view carbon taxes as the most effective and least economically disruptive way of combating climate change. Half of the 2018 Nobel Prize in Economics was awarded to U.S. economist William Nordhaus for his work on carbon pricing.
Alberta’s industrial carbon tax, called the Technology Innovation and Emissions Reduction System, would be $30 a tonne. The province increased the tax by 50 per cent over an earlier proposal so it would align with federal requirements, Alberta’s Environment Minister told reporters in late October.
Alberta’s tax would modify a system the previous NDP government put in place. Unlike Ontario and New Brunswick, Alberta has not had the federal industrial carbon tax applied, and its existing system is still in effect.
The federal government’s carbon tax is set at $30 a tonne next year, increasing by $10 annually until it reaches $50 in 2022. Alberta’s tax as proposed is not designed to rise beyond $30. However, Environment Minister Jason Nixon indicated last week that he would consider annual increases matching Ottawa’s benchmark.
Ms. Turcotte said that while Alberta’s proposal is close to the federal standard, she doesn’t expect Ottawa will accept it without annual increases. “It doesn’t meet the black-and-white standard for the price. It just doesn’t match,” she said.
Mr. Nixon was unavailable to comment. Jess Sinclair, his press secretary, said in a statement: “We believe that Ottawa should not force a one-size-fits-all system, and should instead take into account a variety of effective emission control regimes.”
The Pembina report found one bright spot in Alberta’s proposed industrial carbon tax, concluding that the province’s plan for emissions in the electricity sector is stricter than the federal rules. Alberta would allow less than half the level of emissions from coal-fired power plants as Ottawa’s standard.
Ontario’s proposed industrial carbon tax, known as the Emissions Performance Standards, is significantly weaker than the federal rules, Ms. Turcotte said. It would cover fewer emissions, and new natural-gas power plants would be dirtier than the Ottawa allows. Ontario’s Environment Minister Jeff Yurek declined an interview request.
A 2017 letter from federal Environment Minister Catherine McKenna and federal Finance Minister Bill Morneau complicates matters for Ontario. The letter states that any province where the federal carbon tax is imposed, which includes Ontario, would be required to keep it in place until 2022.
Ms. McKenna said in response to questions about the 2017 letter that it is reviewing the current proposals and will make a decision in the late fall. “Ensuring that pollution pricing systems across Canada continue to meet the federal standard is essential to maintaining the fairness and effectiveness of pollution pricing in Canada,” the minister said in a statement.
The Pembina report found New Brunswick’s proposed system to be the weakest, concluding that it would do little to decrease emissions in the electrical sector or from most large industrial facilities. No industrial carbon tax would be applied to most facilities unless they exceeded their own levels of emissions in previous years, according to the Pembina analysis.
After the federal election in late October, in which his province voted decisively in favour of the Liberals and their carbon-tax platform, Premier Blaine Higgs said he would consider making his climate plan comply with that of Ottawa. Mr. Higgs’s office did not respond to questions about whether it will redesign its proposed industrial carbon tax.
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