Canadian province’s step to strengthen regulation of oil patch more symbolic than effective in hitting emissions target
Canada’s tar sands are the world’s third largest proven reserves of oil (Flickr/ The Cooperative)
By Alex Pashley
The recently-elected government of Alberta has said it will double its carbon tax, in a bid to reassert the province as a responsible oil producer.
Leftwingers the NDP kicked out the 44-year centre-right incumbents in May, sending shockwaves through Alberta’s energy industry.
The levy hike on industrial greenhouse gas emissions is the first green policy move by leader Rachel Notley, who has also promised a review of oil and gas tax royalties and earlier phase-out of coal.
Canada’s failure to meet the climate target it agreed in Kyoto is due almost exclusively to tar sands extraction in the region, which could triple from 2005 to 2020, according to Environment Canada.
On Thursday, environment minister Shannon Phillips said its carbon tax, the first in North America, would increase over the next two years from CA$15 to 30 a tonne.
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That’s triggered for producers emitting over 100,000 tonnes of greenhouse gases a year. Participants must also progressively cut the emissions intensity of their activities, or CO2 for each unit of production.
“If we get it right, our environmental policy will make us world leaders on this issue instead of giving us a black eye around the world,” said Phillips, the Globe and Mail reported. “We were not taken seriously on the national or international stage; with this, that will change.”
Canada is the world’s fifth largest oil producer, with 75% of crude production coming from Alberta, according to the Canadian Energy Research Institute. Four-fifth of that comes from tar sands, which produce 17% more greenhouse gas emissions from extraction to consumption than regular sources.
The move comes amid lay-offs rise as the industry contracts on lower energy prices.
The Canadian Association of Petroleum Producers warned its members face $800 million a year in new taxes as a result of the levy and a 20% rise in corporate taxes, though has said it will work with the government.
Anthony Swift of the National Resources Defense Council, on the other hand, said the effective levy would increase only from $1.80 to $6 due to limits on its scope.
“This is a measure of symbolic importance but unlikely to result in emissions reductions,” he wrote.
Alberta is off course to reach its 2020 emissions target, of a reduction of 50 million tonnes of carbon dioxide below business as usual. Meeting the target would still mean a 12% rise on 2005 levels.
The NDP has said it will meet the target. The Pembina Institute think-tank calculates this will require a 27 million tonne cut between 2014 and 2020.
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Ed Whittingham, executive director at the Pembina Institute, said it would take more than this announcement for Alberta to have a climate change strategy of which it could be proud.
“We recognize the quick and decisive action that Premier Notley and Minister Phillips have taken to strengthen Alberta’s emissions regulations using the tools it has in place, and we look forward to seeing a more comprehensive climate strategy developed later this year,” he said.
Mike Hudema, a Greenpeace Canada climate and energy campaigner said: “We are excited by the new open and consultative approach to climate policy put forward by Environment Minister Shannon Phillips and are glad the change to the existing carbon pricing regulation is just an interim measure since the minimal carbon price increase won’t do much on its own.”
Some oil supporters said the tar sands would never receive approval from environmentalists and should instead focus on lowering costs and gaining regulatory approval for new pipelines.
The carbon levy was an “interim” measure, said Phillips, who didn’t rule out joining a cap-and-trade scheme being adopted by other provinces, Quebec and Ontario. Provinces are taking on the Harper government, which has done little to tackle Canada’s growing emissions. An election is scheduled for October.
“The federal government has completely marginalised itself and the provinces are building their own type of power in the field,” Karel Mayrand, Quebec director at environmental group David Suzuki Foundation told RTCC in May.
Notley will outline that planned review on oil and gas royalties on Friday, the Wall Street Journal reported.