Alberta is set to take the lead from British Columbia in having the country's most onerous carbon pricing, as the federal government presses all provinces to increase levies aimed at reining in greenhouse gas emissions.
In a report to be released Wednesday, Canada's Ecofiscal Commission compares the four provinces that have a carbon price in place or are implementing one: British Columbia, Alberta, Ontario and Quebec. The commission concludes that by 2020, Alberta will have the most stringent policy based on a combination of price per tonne and breadth of activity it taxes.
"For B.C. to get back in the lead, they either have to increase the price or increase the coverage," Ecofiscal chairman Chris Ragan said in an interview. The independent 12-member commission comprises prominent non-partisan economists who offer policy advice to governments on environmental issues.
Its report informs talks between Ottawa, the provinces and the territories as they attempt to reach a pan-Canadian climate strategy this fall. Officials are working through the summer on a series of policy issues, including efforts to forge a minimum national carbon price.
Alberta and British Columbia both have more stringent carbon pricing than Ontario and Quebec due to the higher price, the Ecofiscal report argues. That view is opposed by backers of the cap-and-trade approach used by the Central Canadian provinces, who argue that the price level alone is a misleading measure since the whole point of the emissions-trading plan adopted by Ontario, Quebec and California is to lower the cost of reducing greenhouse gas emissions.
Federal Environment Minister Catherine McKenna said all governments will have to increase the stringency of their climate policies, including carbon prices, in order for Canada to meet its international commitments.
"If we are to significantly reduce our greenhouse gas emissions, pollution must be priced in a way that will create the right incentives to develop cleaner solutions and create stable, predictable market conditions," Ms. McKenna said in an e-mailed statement on Tuesday.
Officials in Ontario and Quebec are uneasy over the national focus on carbon-price levels, particularly in light of Ms. McKenna's recent comment that Ottawa would seek to establish "uniformity in terms of a national price."
They worry that the federal government may impose an additional carbon levy in their provinces to bring them up to the $30-a-tonne level planned in British Columbia and Alberta. And in federal-provincial talks, they are urging Ottawa to focus on results – planned emission reductions – rather than price, one provincial government source said Tuesday.
There are two types of carbon pricing. Under a cap-and-trade system, government sets an emissions cap for industry and companies buy and sell allowances to meet that cap. The prevailing trading price is the carbon price. In contrast, Alberta and British Columbia plans impose a direct tax on industry's emissions, including on gasoline marketers, who add it to the price at the pump.
B.C. Premier Christy Clark has long boasted that her province has the most aggressive climate policy with its $30-a-tonne carbon tax that has been set for the past four years. But a government-appointed panel noted the province's emissions are beginning to rise again, and recommended in the spring that Ms. Clark announce annual increases to the levy starting in 2018 – though some in the business community oppose higher carbon taxes and the Premier faces re-election next year.
Alberta's New Democratic Party government introduced a carbon tax that will kick in at $20 a tonne next January and climb to $30 in 2018; it has also set a 100-megatonne emissions cap for the oil sands sector. Despite that, the oil- and gas-producing province expects emissions to climb for the next decade before levelling out.
Premier Rachel Notley defends the climate plan as critical to the province's efforts to transition to a low-carbon economy, and argues that a credible carbon policy will help reduce opposition to Alberta's desire for new pipelines that would provide offshore markets for the growing oil sands sector.
Some prominent environmentalists have praised the Alberta plan. Nonetheless, many groups, First Nations leaders and municipal politicians oppose key pipeline proposals – including Kinder Morgan's Trans Mountain expansion to Vancouver, and TransCanada Corp.'s Energy East.
Hearings on the Trans Mountain proposal by a federally appointed panel in British Columbia in the past two weeks were dominated by opponents who fear pipeline spills and argue for a transition away from carbon-intensive fuels such as oil sands crude.
In Washington, a coalition of environmental groups led by the Natural Resources Defense Council warned Tuesday about the potential for catastrophic spills along the U.S. East Coast if Alberta crude is exported from New Brunswick via the Energy East pipeline. The activists – who also oppose oil sands expansion over global warming fears – urged the United States to impose a ban on tankers carrying oil sands crude.
Ms. Notley's government faces a different kind of opposition at home over its climate policy. The Wildrose Party is critical of the carbon tax, and federal MP Jason Kenney – who is running for the leadership of the provincial Progressive Conservatives on a platform of uniting the two conservative opposition parties – is campaigning hard against it.
"Canada has a climate goal – not a revenue generation goal, not a revenue neutrality goal, not a price stringency goal – a climate goal," Katie Sullivan, Toronto-based director for the International Emissions Trading Association, said in an e-mail. "Any policy comparability or discussions around carbon pricing 'equivalency' must be underpinned by environmental outcomes and performance. Period."