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Did Alberta Miss an Opportunity in its Budget to Help Keystone XL Approval?

With the Keystone XL debate heating up in the United States, many opponents focus on the greenhouse gas emissions record of oil sands production. Even though Alberta oil sands emissions are 7 per cent of Canadian greenhouse gas emissions and only a miniscule part (0.15 per cent) of worldwide emissions, Keystone XL has become the poster child for climate change policies in the United States. Alison Redford, Premier of Alberta, has quite rightly argued that Alberta and the industry has paid attention to carbon reduction with significant spending on new technologies and various other practices that reduce greenhouse gas emissions. There is still more to come.

One of the arguments made by the Premier is that Alberta was the first in North America to bring in a carbon pricing regime for heavy emitters. A carbon levy of $15 a tonne is imposed on emissions in excess of an intensity target (emissions relative to production). Companies can offset the charge by spending funds on carbon-reducing policies. For the current year, the Alberta government collects $60 million in the carbon levy.

The Alberta carbon levy is lower than many other carbon levies, such as the $30 carbon tax on all emissions in British Columbia. In fact, many producers expect carbon prices at $30 a tonne when determining their investment plans. It seems that in the recent Alberta budget, the province could have easily doubled the carbon levy to indicate its effort to deal with greenhouse gases. This type of action would have helped Alberta’s stance that it is dealing with its environmental footprint in tangible terms.

It is not too late. A doubling of the carbon price under the Alberta scheme would make clear to Americans that Alberta is no slouch in dealing with greenhouse gas emissions. After all, no carbon pricing scheme operates in the United States that is responsible for almost a fifth of worldwide greenhouse gas emissions.