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Notley Unveils Carbon Plan on Eve of First Ministers' Meeting


MNP's TAKE: Alberta has increased the carbon levy on industry, established a hard cap on oil sands emissions and set a date for phasing out of coal-fired generation in efforts to gain global recognition on its climate change policy. How these sweeping changes affect financial reporting and tax planning for energy-related companies remains to be seen, so keeping in the loop is critical.

For assistance in managing these changes within your operation, contact Lee Plamondon, CPA, CA, at 780.769.7809 or [email protected], or your local MNP advisor.


Alberta’s NDP government is imposing an economy-wide carbon tax starting in 2017 and a cap on emissions from the oil sands in a sweeping plan aimed at showing it is serious about fighting climate change.

Premier Rachel Notley’s strategy – a major shift in environmental policy for Canada’s largest oil-producing province – will take centre stage as Canada’s premiers and Prime Minister Justin Trudeau gather in Ottawa on Monday for a first ministers’ meeting to craft a strategy for the coming Paris climate talks.

Canada will be heading to the UN-sponsored summit with a limited national strategy and carbon rules that vary widely between provinces. The Prime Minister is facing pressure from environmentalists to set national standards, but may also risk pushback from the premiers if he does so.

During the recent federal election campaign, Mr. Trudeau promised to allow Canada’s provinces to continue to write their own climate rules. Quebec and Ontario have developed a system of cap and trade, while British Columbia has a carbon tax.

Alberta’s plan, released Sunday, also features a phaseout of coal-fired power in the next 15 years, a 10-year goal to nearly halve methane emissions, as well as incentives for renewable energy.

“Alberta is leading again,” Ms. Notley told a room of supporters at Edmonton’s science centre. “The government of Alberta is going to stop being the problem and we are going to start being the solution.”

The oil industry is in the second year of a crude-price collapse that has led to billions of dollars in spending cuts and at least 37,000 job losses.

Previous Progressive Conservative governments in Alberta sought to shield the dominant industry from costly emission limits.

Even so, the plans won plaudits from powerful oil executives along with environmental groups.

There are no hard targets, but under the strategy carbon emissions are projected to begin to fall under today’s levels by 2030. The NDP had already announced plans to double the carbon levy on major industrial emitters.

The new carbon tax is expected to raise $3-billion annually by 2018, but the government will not be cutting any provincial taxes.

Some of the new revenue will be spent on technology to fight climate change and the NDP has committed to helping the lowerearning 60 per cent of households cope with some of the increased transportation and heating costs through an “adjustment fund.”

The six-month-old government says the previous weak climate policies hampered efforts to persuade the United States and other trading partners to accept more shipments of crude from the carbon-intensive oil sands.

U.S. President Barack Obama said his country’s efforts to battle climate change would be tarnished by approving TransCanada Corp.’s Keystone XL pipeline that would ship Alberta oil to Texas refineries. He rejected it after seven years of review.

“We got a major wake-up call a few weeks ago in the form of a kick in the teeth from the government of the United States,” Ms. Notley said. “Unfairly in my view, the President of the United States claimed that our production is some of the dirtiest oil in the world. That is the reputation that mistaken government policy in the past has earned for us.”

Energy leaders had previously warned any onerous new costs would be disastrous for an industry under severe financial pressure.

Still, Suncor Energy Inc. chief executive Steve Williams, Shell Canada head Lorraine Mitchelmore, Cenovus Energy Inc. CEO Brian Ferguson and even Canadian Natural Resources Ltd. chairman Murray Edwards, who had been among the sharpest critics of the NDP’s economic policies, stood with Ms. Notley and environmental groups to endorse the moves.

“This plan will position Alberta, one of the world’s largest oil and gas producing jurisdictions, as a climate leader and will allow for ongoing innovation and technology in the oil and gas sector,” said Mr. Edwards, the Calgary-based oil man, financier and sportsteam owner.

New measures include:

A 100-megatonne cap on carbon emissions from the oil sands, Canada’s fastest-growing source of emissions, once new rules are adopted. It currently emits 70 megatonnes annually.

An economy-wide tax of $20 per tonne on carbon-dioxide emissions starting in 2017, rising to $30 in 2018. Equal to seven cents per litre of gasoline, the average household will see heating and transportation costs increase by $470 annually by 2018.

Incentives to have nearly onethird of power generated from renewables such as wind and solar by 2030.

TransAlta Corp., the largest coal-fired power generator, said it was heartened by the gradual shift that it said would “ensure system reliability and price stability” for customers. The province is appointing a negotiator to work with the industry as it tries to avoid stranding capital, or the loss of asset value by hastily rendering plants useless.

The NDP devised the strategy with data from a panel led by University of Alberta economist Andrew Leach that held numerous meetings with the public and industry groups in recent months.

Climate activists including former U.S. vice-president Al Gore applauded the NDP, saying the government was taking muchneeded leadership as Canada seeks to improve its environmental reputation at the Paris summit later this month.

“The oil-sands emissions limit will give the world certainty that our emissions will not grow unchecked. It’s a game changer and will change the debate about the oil sands industry doing its part to address climate change,” said Ed Whittingham, executive director of the Pembina Institute, an environmental think tank.

Kudos were not universal, however. “This new carbon tax will make almost every single Alberta family poorer, while accelerated plans to shut down coal plants will lead to higher power prices and further jobs losses,” said Brian Jean, Leader of the province’s Wildrose opposition party.

This article was written by JUSTIN GIOVANNETTI and Jeffrey Jones from The Globe And Mail and was legally licensed through the NewsCred publisher network.