The federal Liberals have already laid out their plans to ensure the national carbon price hits $50 a tonne by 2022, but government documents indicate Ottawa is eyeing hikes beyond that time horizon.
Federal Environment Minister Catherine McKenna says no decisions have been made about a carbon price post-2022. However, a federal Finance Department document distributed to Alberta reporters on Wednesday by the province's United Conservative Party (UCP) discusses the nuts and bolts of the federal carbon-pricing "backstop" or benchmark. The document notes the overall approach will be reviewed in 2022, "to confirm the path forward, including continued increases in stringency in future years."
The document, originally obtained by subscription-only news website Blacklock's Reporter, suggests that Prime Minister Justin Trudeau's government is eyeing carbon-price increases beyond 2022, and above the $50-a-tonne price, the UCP said. Many economists, environmentalists and even energy-industry watchers have already assumed this was the plan – but a post-2022 price road map has not been clearly laid out by Ottawa.
The UCP released the documents on Wednesday to attack the NDP government's political alliance with the Trudeau government, which has seen Premier Rachel Notley agree to phase in a $50-a-tonne carbon tax following Ottawa's 2016 approval of the Trans Mountain pipeline expansion to the West Coast.
However, the UCP says the potential of carbon-price increases beyond $50-a-tonne will further put off investors who might be eyeing Canadian projects or companies as global oil prices push higher. The UCP is in political alignment with outgoing Saskatchewan Premier Brad Wall, who has also said his province has no intention of adopting the tax, and will fight any attempt by Ottawa to impose one.
The federal government has mandated a carbon levy of at least $10 a tonne this year, and annual increases of $10 until it hits $50 a tonne in 2022. Carbon pricing is an especially critical issue in Alberta, which has the highest greenhouse gas emissions of any province, where the carbon tax has already gone to $30 a tonne as of Jan. 1, and where the province's industry-heavy economy is centred around producing oil and natural gas for Canadian and U.S. consumers.
The UCP is challenging the NDP in the provincial election scheduled for early next year – and is now leading in the polls. Leader Jason Kenney's hallmark promises include scrapping the province's carbon tax, and promising to go to battle with Ottawa over energy policy.
On Wednesday, Alberta Environment Minister Shannon Phillips said in an interview that her province has been consistent in saying it is not considering any increases to its carbon levy beyond $50 a tonne. "We've been clear."
Various economic models have shown that Canada will need carbon prices of $150 a tonne or more to meet the target of reducing emissions by 30 per cent below the 2005 level by 2030. The Pembina Institute, an environmental think tank, says a predictable schedule of increases between 2022 and 2030 will be required to provide the economic certainty needed to drive "clean" innovation.
In an interview this week, Ms. McKenna said the Liberal government is committed to reviewing the overall approach to carbon pricing by early 2022 to confirm the path forward.
At that 2022 review, she added, the government will look at emissions trends and the impacts of other policies.
The document release from Alberta's UCP comes the same week that Ottawa unveiled a draft legislative proposal outlining key elements of the carbon price backstop that will apply only in provinces that do not have their own levy or have one that fails to meet federal standards.
With files from Shawn McCarthy, Ottawa