Alberta Prime Minister Danielle Smith welcomed a promise from the Canada Conservative Party on Monday to eliminate federal support on carbon industrial prices, if it were to form the next federal government. Although it seems unlikely that the province leaves its long -standing pricing system completely.
“We fully support Pierre Poilievre’s commitment to return the jurisdictional authority to the provinces to regulate their own industrial emissions,” Smith said in a written statement.
In 2007, when Stephen Harper was Prime Minister and Ed Stelmach was Prime Minister, Alberta became the first jurisdiction in North America to put a price on carbon industrial emissions.
This policy is separated from carbon pricing at the consumer level, commonly known as the “Carbon Tax”, which Alberta adopted in 2017 under the NDP Prime Minister Rachel Notley, then repealed in 2019 Under UCP Prime Minister Jason Kenney.
Almost immediately after that, Alberta became Federal Carbon Tax under the liberal government of Justin Trudeau, which now has has been effectively murdered by the liberal government of Mark Carny.
Throughout this flow, the Alberta Industrial Price System has persisted. However, it has undergone numerous changes over the years, including pricing increases per ton that keep it in line with federal support requirements.
On Monday, the conservative leader Pierre Poilievre promised Eliminate Federal Carbon Price Law completelyIncluding support, if your party wins the next federal elections. The provinces would be free to do what they want with their own industrial policies, he said.
How the Alberta Carbon Price Industrial System works
Large -scale emitters, such as oil sand facilities, electrical plants and other facilities with more than 100,000 tons of annual emissions, are subject to this industrial carbon pricing system.
The price of carbon only applies to the part of its emissions beyond the specific “reference points” of the installation that are calculated by a complex formula.
At the same time, the facilities can also receive credits to reduce emissions below their reduction objectives.
Low Issuer facilities can sell their credits to greater issuance facilities, which can then use the credits to avoid paying a part of the carbon price that they must. This effectively creates a carrot and a stick within a single policy, with the carrot for low sender facilities that are financed with the stick that is applied to the high sender facilities.
The money from the facilities that pay the carbon price enters a fund managed by a Provincial Agency which offers subsidies to support projects and new technologies “that reduce emissions, reduce costs, attract investment and create jobs in Alberta.”
This approach for carbon industrial prices has seen broad support from a variety of Alberta leaders, including former Prime Minister Jason Kenney.
“That fund, paid by the main issuers, I think it is a good way to do it,” Kenney said in 2018, even when he campaigned against carbon tax at Alberta consumer level.
Past support, future adjustments?
Smith, herself, has also expressed her support for the system, citing reductions in the intensity of the emissions of the oil sands as proof of their effectiveness.
“We will continue with an industrial carbon pricing strategy because it is working,” She said last May.
Alberta Environment Minister Rebecca Schulz said on Monday that the province can consider adjusting the details of her industrial carbon pricing policy, if the federal support was eliminated.
By pointing out that the Alberta system has been in its place “long before federal liberals entered power,” Schulz said that “historically it has worked well for the industry.”
“However, I would say that the subsequent price and the price of carbon established by the Federal Liberal Government have made our industry less competitive,” he added.
“So we are working with the industry at this time to gather your comments on how we could do better.”
Alberta NDP leader Naheed Neshi said on Monday that the federal government has administered consumer carbon tax, but the industrial price of carbon “has always worked”, in his opinion.
Getting rid of the industrial price system “would be disastrous for industry and disastrous for the environment,” Neshi added.
Andrew Leach, an economist of energy and environment at the University of Alberta, said it is “probably probable” that Alberta would maintain his system in place, if a government led by Pailievre discarded federal support.
“The question is whether it will continue to be as strict and biting as it would have been,” he said, adding that a key issue is if there will be enough pressure to ensure that policies really reduce emissions, if the federal policy was canceled.
Who pays for the carrot?
As part of his announcement on Monday, Pailievre also promised to expand eligibility for existing federal tax credits to “reward heavy industries that manufacture products with lower emissions than the world average.”
He said that his government’s approach would be “carrot, not stick.”
But eliminating the carbon price stick in favor of a larger fiscal credit carrot also means that taxpayers would cover more of the cost of that carrot, said Chris Severson-Baker, executive director of the Pembina Institute, a group of clean energy experts.
“This proposal really is to change a system of polluting payments … to the taxpayers’ payment system,” he said.
“It would be completely changing to a subsidy system, instead of a combination of incentives to reduce emissions, combined with incentives to invest.”
The conservative leader Pierre Poilievre is asked if he is prepared to compromise Canada with some type of emission objectives if he became prime minister.
In Severson-Baker’s opinion, the proposal also presents “a huge amount of uncertainty” in the decisions that companies are trying to make new investments in the country, at a time when Canada is already dealing with a new panorama under the president of the United States, Donald Trump.
“The last thing we want to do is add to the uncertainty that investors are experiencing in Canada at this time,” he said.
The Federal Minister of Energy and Natural Resources, Jonathan Wilkinson, said that Pailievre’s plan would also harm Canada to expand and diversify its commercial partners.
“I would say that Mr. Poilievre really doesn’t understand how the industrial price system works,” he said.
Wilkinson said that “the European Union is in the process of establishing border carbon settings, which means that decarbonization is really important if we want to trade with Europe.”
“Competitiveness and long -term economic growth and economic growth depend on the fact that we advance with decarbonization,” he said. “In Alberta, most of the money that comes from the industrial price is recycled to the industry to really invest in decarbonization projects.”
The Pathways Alliance, which last year publicly pressed Pailievre to clarify its position on the industrial price of carbon, told CBC News on Monday that he had no comments about his promise to get rid of federal support.
