The federal government is letting Alberta Premier Jason Kenney proceed with his own version of an industrial carbon tax instead of applying Ottawa’s carbon pricing on heavy emitters in Alberta.
The Technology Innovation and Emissions Reduction (TIER) regulation set a $30-per-tonne carbon tax on industrial emitters like oilsands facilities and has been accepted under the federal Greenhouse Gas Pollution Pricing Act for one year, the minister of environment and climate change Jonathan Wilkinson announced Friday.
Kenney said he’s pleased with the federal government granting Alberta TIER program equivalency with the federal industrial carbon tax, but a federal consumer carbon tax on gas set to take effect in Alberta Jan. 1, 2020, still has him concerned.
“Obviously, we continue to have a fight with the federal government over the carbon tax. That’s why we continue to support our friends in Saskatchewan and Ontario in their appeals on their carbon tax references,” he said.
In a few weeks, the Alberta Court of Appeal will be hearing arguments on Alberta’s judicial reference challenging the constitutionality of the federal carbon tax, he said.
“We believe, frankly, that we have a stronger case than Saskatchewan or Ontario because of how robust our TIER fund is,” he said. “It’s a very detailed and credible program for emissions reduction through the levy price that we are posing here. We, therefore, do not need the federal government to punish people for heating their homes and filling up their gas tanks.”
The TIER system will have to go through annual reviews to ensure it remains in compliance with the federal benchmark, which will rise to $40 per tonne in 2021 and $50 per tonne in 2022 — a condition Kenney said he opposes.
“What we don’t want is the federal government bigfooting into Alberta and enforcing their own separate regulatory regime.”
He also said raising the price on carbon will make Alberta’s economy less competitive and will result in the province losing more business to the U.S., which has no carbon tax.
“We are helping Alberta businesses thrive, which is why TIER has been developed to ensure the federal system does not negatively affect Alberta’s trade-exposed industrial sectors,” said Environment and Parks Minister Jason Nixon in a Friday morning statement.
A system for heavy emitters should not be used to correct for competitiveness pressures that are not a result of the carbon price differential between Canada and competing jurisdictions, said Isabelle Turcotte, director of federal policy at the clean energy think tank Pembina Institute.
The federal decision represented a “huge win,” but we can be more ambitious, said Turcotte.
Under the federal carbon pollution pricing regime instituted in “backstop” jurisdictions such as Manitoba and Saskatchewan in 2019, the federal government estimates that 42 per cent of greenhouse emissions will be covered by the consumer fuel charge, and 27 per cent by the output-based pricing system for industrial emitters, for a total of 69 per cent of emissions.
“It’s really disheartening to see political leaders actually fight — and spend taxpayer’s money to fight — against climate action, and against putting in place measures that are meant to protect their industries’ competitiveness. This is where the economy is going, and if we’re not putting in place the guard rails to make sure we’re going in the right direction, we’re going to miss our piece of that pie,” said Turcotte.
At a Friday news conference, NDP Opposition critic for economic development, trade and tourism Deron Bilous also said Kenney was being shortsighted by fighting Ottawa in court.
“I think what we’re going to see is another futile fight wasting tax dollars, as opposed to identifying creative ways to meet the minimums while also investing in technologies and processes that will be an economic engine,” he said.
The Canadian Association of Petroleum Producers (CAPP) said it was pleased that the federal government moved quickly to accept the provincial program.
“This program has the components to ensure both Alberta’s large and small oil and natural gas operations remain competitive, while clearly satisfying the requirements set by the federal government,” a Friday statement from Terry Abel, executive vice-president of Canada operations and climate at CAPP said in part.
— With files from Janet French