Geoffrey Morgan POSTMEDIA
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© Provided by Financial Post
Prime Minister Justin Trudeau listens to Minister of the Environment and Climate Change Jonathan Wilkinson during a news conference Friday.
CALGARY — The federal Liberal government unveiled sweeping new climate change policies Friday, including plans for a five-fold increase in carbon taxes over the next 10 years, in a move that raises fresh concerns about affordability and competitiveness of trade-exposed industries even as Canada now appears poised to meet its 2030 climate targets.
“The clean growth economy is not some utopian idea that might happen far off into the future,” Environment and Climate Change Minister Jonathan Wilkinson said Friday as Ottawa unveiled new policies aimed at reducing the country’s carbon emissions, which included a higher federal carbon tax, more green spending and changes to the anticipated Clean Fuel Standard regulations.
The new policies were immediately praised by environmental groups such as Greenpeace, which called it “a serious and well-thought out plan to achieve our 30 per cent reduction target.”
But Alberta’s business executives are concerned about the impact on energy-intensive, trade-exposed industries such as natural resource extraction and manufacturing.
“The clean growth economy is not some utopian idea that might happen far off into the future,” Environment and Climate Change Minister Jonathan Wilkinson said Friday as Ottawa unveiled new policies aimed at reducing the country’s carbon emissions, which included a higher federal carbon tax, more green spending and changes to the anticipated Clean Fuel Standard regulations.
The new policies were immediately praised by environmental groups such as Greenpeace, which called it “a serious and well-thought out plan to achieve our 30 per cent reduction target.”
But Alberta’s business executives are concerned about the impact on energy-intensive, trade-exposed industries such as natural resource extraction and manufacturing.
Business Council of Alberta president and CEO Adam Legge called the plans announced Friday “extreme growth of the carbon tax,” and said it would be important for the federal government to impose a border adjustment tax on carbon for trade exposed industries in order to level the playing field for domestic companies.
“We encourage the federal government to explore border adjustments,” Legge said.
As Ottawa plans to ramp up carbon taxes, it also announced $15.2 billion in new spending on climate and infrastructure initiatives in an effort to hit its 2030 climate targets that were set as part of the Paris Climate Agreement in 2016.
The updated climate plan calls for a more than five-fold increase in carbon taxes from current levels of $30 per tonne to $170 per tonne by 2030.
“Canada wasn’t going fast enough so I think this provides the incentive (to invest in emissions-reducing technologies) and it will allow us to play on the world stage and attract capital back to our industries,” said Audrey Mascarenhas, president and CEO of Questor Technologies Inc., a Calgary-based clean-technology company.
Mascarenhas said her company’s technology can create carbon offsets for oil and gas companies at a cost of $2 per tonne, and so she expects a $170 per tonne carbon tax will drive more investment in the clean-tech sector.
The increases to the carbon tax would come in $15-per-tonne phases increments each year beginning in 2023 and would mean that by 2030, consumers would pay 37 cents per litre in carbon levies for their gasoline and an additional $5.36 per gigajoule to heat their homes with natural gas
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© Peter J. Thompson/National Post files
By 2030, consumers would pay 37 cents per litre in carbon levies for their gasoline.
That would imply that the carbon tax for natural gas would be roughly double the current price of the commodity, which averaged US$2.27 per GJ in Ontario on Thursday and US$1.96 per GJ in Alberta.
The oil and gas industry has been looking for some clarity on how carbon taxes will change over time and Friday’s announcement provides a timeline and price, said Tristan Goodman, president of the Explorers and Producers Association of Canada, which represents mid-sized oil and gas companies including most of the country’s natural gas producers.
“It does give us some stability around the carbon price so we can start to implement some of those green technologies,” Goodman said, adding there are concerns about whether consumers can absorb the higher costs.
The policy document released Friday, titled “A Healthy Environment and A Healthy Economy,” also signalled that natural gas would not be subject to the soon-to-be-announced Clean Fuel Standard. The Financial Post reported Thursday that the industry is expecting Ottawa to unveil CFS regulations before the end of the year.
The new fuels regulations are now expected to focus strictly on liquid fuels such as gasoline and diesel and ignore gaseous fuels and solid fuels like coal.
Goodman called the exemption for natural gas, as well as other gaseous fuels, “a wise, sensible decision” that will prevent natural gas prices from heading “significantly higher.”
That would imply that the carbon tax for natural gas would be roughly double the current price of the commodity, which averaged US$2.27 per GJ in Ontario on Thursday and US$1.96 per GJ in Alberta.
The oil and gas industry has been looking for some clarity on how carbon taxes will change over time and Friday’s announcement provides a timeline and price, said Tristan Goodman, president of the Explorers and Producers Association of Canada, which represents mid-sized oil and gas companies including most of the country’s natural gas producers.
“It does give us some stability around the carbon price so we can start to implement some of those green technologies,” Goodman said, adding there are concerns about whether consumers can absorb the higher costs.
The policy document released Friday, titled “A Healthy Environment and A Healthy Economy,” also signalled that natural gas would not be subject to the soon-to-be-announced Clean Fuel Standard. The Financial Post reported Thursday that the industry is expecting Ottawa to unveil CFS regulations before the end of the year.
The new fuels regulations are now expected to focus strictly on liquid fuels such as gasoline and diesel and ignore gaseous fuels and solid fuels like coal.
Goodman called the exemption for natural gas, as well as other gaseous fuels, “a wise, sensible decision” that will prevent natural gas prices from heading “significantly higher.”
New fuel regulations will exempt natural gas.A typical family in Alberta uses about 100 GJs of natural gas per year to heat their homes, so a $170 per tonne carbon tax will result in an increase of approximately $500 per year cost for a household, said Trevor Tombe, economist at the University of Calgary.
But Tombe added that carbon tax rebates are also poised to rise to $3,200 per year by 2030, or $800 every three months.
“These are getting to be pretty significant,” Tombe said, adding the rebates won’t eliminate the “substitution effect” of the policy, because families will be able to spend their rebates on energy efficiency measures to reduce their need for heating fuels or for other expenses.
Tombe said that, based on existing research, a $170 per tonne carbon tax would lead to an emissions reduction of approximately 150 million tonnes, or a 25 per cent cut in the country’s total emissions.
“Basically, that’s going to get you right in line with the 2030 target. Layer on top of that the Clean Fuel Standards, we are on track to exceed the 2030 target by potentially as much as 50 million tonnes,” Tombe said.
Rebates and credits for building retrofits will help create work for tradespeople but the policies announced Friday could also hurt resource industries across the country, Sean Strickland, executive director of Canada’s Building Trades Unions, said in a release Friday.
“The government needs to do more than issue a statement about creating jobs; but must align their climate strategy to secure the middle-class jobs that work in the resource sector,” Strickland said.
Ontario Premier Doug Ford said Friday he was “floored” by Ottawa’s plan. Fellow Conservative politicians in Alberta expressed similar shock.
“This is not the time to even be considering increasing the cost of living for the people of Alberta,” Alberta Environment and Parks Minister Jason Nixon said at a Friday press conference, noting that the COVID-19 pandemic has induced a recession in the country.
“We promised Albertans we would fight this all the way to the Supreme Court and we have fought this,” Nixon said.
Alberta’s business executives are concerned about the impact on energy-intensive, trade-exposed industries such as natural resource extraction and manufacturing.
Prime Minister Justin Trudeau told reporters Friday that he expects voters would have the chance to weigh in on the rising carbon tax with an election.
“I’ve always said that there will be elections before the price is increased in 2023,” Trudeau said, noting that the Liberals have a minority government in Parliament and an election is expected before 2023.
Trudeau did not answer whether a new plan would be needed in the event Alberta’s legal challenge to the carbon tax wins at the Supreme Court, but reiterated that most Canadians support action on climate change.
With a file from Canadian Press
• Email: gmorgan@nationalpost.com | Twitter: geoffreymorgan
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