What’s Next for Carbon Pricing in Alberta?
With the Supreme Court of Canada rendering it’s decision back in March on the federal carbon tax and the forthcoming expiry of Alberta’s conservation cropping protocol at the end of 2021, the topic of carbon pricing in Alberta has exacerbated itself beyond what some would have expected or hoped for in the province.
With Ottawa setting the price of carbon at $40 per tonne and with progressive increases to $170 per tonne by 2030, Alberta will need to find a solution to minimize the costs on Albertan’s, their wallets, and the provincial economy. This, all while ensuring that the provinces emissions are reduced by equal to or greater than 30% below our 2005 emission levels by 2030 as outlined by Federal government specifications.
There are several options for the Government of Alberta. In 2014, the Province of Quebec had linked their cap-and-trade system with California’s system – effectively creating the largest carbon market in North America through the Western Climate Initiative (WCI). In this system, emitters are required to buy carbon credits for each tonne of greenhouse gas they emit into the atmosphere. In order to generate the required emissions reductions as stated by federal specifications, Quebec caps the number of credits that are sold while lowering this same cap over time. There are numerous benefits and drawbacks of this option that must be weighed, such as the fact that Quebec’s emissions have fallen in comparison to its 2005 levels whereas Alberta’s emissions have grown since 2005. Therefore, under a cap-and-trade system, Alberta would likely be required to offer fewer credits for a higher price in order to meet 2030 targets.
Another option would be similar to New Brunswick, which has implemented their own carbon price while concurrently reducing the gas tax in the province. Though, this system opposes the objective of the federal governments carbon tax which intends to create benefits for individuals that are low gas consumers, and instead, New Brunswick’s plan for carbon pricing will mostly provide benefit to those within the province that are large consumers of gas. Alberta had increased the provincial gas tax by four cents per litre back in 2015 and a reduction would essentially turn this from a permanent change to a temporary increase. Another province, Saskatchewan, has suggested that they would like to implement a system similar to New Brunswick’s, though the Federal Minister of Environment, Jonathan Wilkinson, mentioned that “would defeat the purpose,” signaling that the approved plan in New Brunswick may soon require amendments.
As for the Alberta Government, it is yet to be seen what changes may be made in creating Alberta’s equivalent (or if Alberta will continue under the federal backstop), though it has been suggested that the province will begin to seek feedback on Albertans favored approach to carbon pricing “in the coming weeks.”
As for Albertan businesses, it is clear that companies operating within the province – such as Radicle Balance – are at the forefront (and leaders) of the global carbon market. Radicle Balance works with both organizations and individuals to measure, reduce, and offset their emissions, and has successfully coordinated the buying and selling of carbon credits through Alberta’s Conservation Cropping Protocol that is set to expire at the end of this year.
The Conservation Cropping Protocol has provided opportunities for Albertan farmers to earn (and sell) carbon offsets by increasing soil carbon levels through no-till management, and by reducing greenhouse gas emissions from lower fuel use. To date, Alberta farmers have generated over 17,997,378 carbon credits; and with the protocol set to expire, Albertan farmers will now be unable to secure this revenue source, all while the federal carbon tax is set to add $13/acre to a grain-growers operating costs.
A budding solution to the protocol expiring may be in the Alberta Government redistributing funds that the province collects from large emitters through the Technology Innovation and Emissions Reductions Regulation (TIER) to farmers that employ conservation practices on their land to reduce emissions within the province. Radicle Balance, with its proven record of buying and selling carbon credits in the province, could easily convert this idea into a reality as it relates to the companies tested processes and data in working within Alberta’s Emission Performance Credit Registry.
It is clear that the province of Alberta has many decisions regarding carbon pricing to make in the coming weeks and months ahead. Whether Alberta will follow Quebec or New Brunswick’s lead is yet to be seen, though with the province set to be seeking feedback in the coming weeks on an eventual made-in-Alberta carbon pricing system, Albertan’s should be hearing about next steps in the near future.
