Duane Bratt is a professor in the department of policy studies at Mount Royal University in Calgary.
The Alberta government released an incredibly bold climate change strategy ahead of Monday's First Ministers in Ottawa. Premier Rachel Notley will also be bringing this climate change strategy with her to Paris in a week for a major international climate change conference.
Ms. Notley's NDP government has only been in power just six months, but this climate strategy will almost certainly be seen as its defining policy initiative.
The strategy calls for a broad-based carbon tax to begin on Jan. 1, 2017 that will see increased prices for consumers with their gasoline and home heating bills. Motorists will pay an extra 4.7 cents a litre on gasoline and households will pay about $320 more for home heating in 2017 and $470 in 2018. Lower-income households would receive some rebates on this carbon tax.
The carbon tax has two major goals around reducing greenhouse gas (GHG) emissions. First, it hopes to encourage conservation by increasing the cost of using fossil fuels. It is based on the polluter-pays principle, but for all polluters (producers and consumers). Second, it creates a fund (about $3-billion a year) that will be used for green-energy projects. This includes subsidies on expanding wind and solar power, technological advances that reduce GHG emissions, and mass public transit. However, I also expect some of this fund to be put in general revenue to reduce a budget deficit that is estimated at $6.1-billion for 2015-2016.
The second major feature from this climate change strategy is a timetable to eliminate coal-fired electricity by 2030. This would reduce GHG emissions and improve Alberta's air quality. Currently coal represents about 40 per cent of Alberta's electricity. The goal is that two-thirds of current coal electricity will come from wind and solar. I am firmly in the camp of the skeptics on this one. When Ontario divested itself from coal it was not – despite statements from its government – it was because of a mass switch to green energy, but rather to the restarting of nuclear reactors. Alberta does not have nuclear reactors, and is unlikely to acquire them under an NDP government. The weaning off of a coal will more realistically be the result of a substantial increase in the burning of natural gas; much more than the anticipated target of 70 per cent of Alberta's electricity. Natural gas (360-575 CO2 equivalent/gwh) may be much cleaner than coal (800-1000), but its lifecycle GHG emissions are substantially higher than hydro, nuclear, or renewables (1-30).
Ms. Notley believes that this climate change strategy is a political winner. Prime Minister Justin Trudeau is also a winner: he campaigned on reducing Canada's GHG emissions, and having Canada's largest per capita emitter introduce a plan for reduction will help that case. Environmental groups, such as the Pembina Institute and Greenpeace, are already praising Alberta's strategy. One of the other big winners is, paradoxically, Alberta's oil and gas sector. It achieved a broad-based carbon tax that includes consumers, which is something that the Canadian Association of Petroleum Producers and other major industry leaders had advocated. In addition, it is hoped that this climate change strategy will help repair Alberta's environmental reputation nationally and internationally. A better environmental reputation will assist Alberta's efforts in getting its oil and gas products to market: A major reason why U.S. environmental groups targeted, out of all proportion, the Keystone XL pipeline was due to Alberta's poor environmental record.
The transition from coal will also lead to more natural gas plants being built in the province. Given the rough ride that Alberta's gas industry has had for several years due to the rise of shale gas in the U.S., this will be a big stimulus for them. Finally, this strategy raises the overall emissions ceiling for the oil sands from 70 to 100 megatonnes.
The biggest loser is the coal industry. Essentially, the Notley government has chosen to support one part of the energy sector (oil and gas) versus another (coal). The Wildrose Party is strongly opposing Ms. Notley's climate strategy. Wildrose leader Brian Jean describes a carbon tax as a "tax on everything." In a statement, Mr. Jean said '[t]his new carbon tax will make almost every single Alberta family poorer, while accelerated plans to shut down coal plants will lead to higher power prices and further jobs losses." Rural municipalities are also opposed to ending coal because of the loss of jobs for people working in coal mines and in (largely rural-based) coal-fired plants.