Alberta to price, cap carbon in 2017

OREANDA-NEWS. November 25, 2015. Alberta will implement a carbon price across its economy starting in 2017, premier Rachel Notley said today.

The carbon price will start at C\\$20/metric tonne (\\$14.99/t) in 2017 and rise to \\$30/t in 2018.

Alberta also will cap greenhouse gas emissions from oil sands production at 100mn t CO2e/yr. And it will phase out coal-fired power by 2030, replacing two-thirds of it with renewable resources.

"We are turning the page on the mistaken policies of the past," Notley said. "We are going to get this right."

The carbon price and emissions cap represent the first major update to Alberta's climate policies following the victory of Notley's New Democratic Party in May elections, which ended four decades of rule by the Progressive Conservative Party.

The limit for the oil sands leaves about 30mn t of emissions growth for the sector, given current emissions of about 70mn t/yr. But it will have some provisions to allow for new upgrading and co-generation.

The carbon price and other policies will cover 78-90pc of Alberta's economy. The carbon price will apply to transportation fuels at the distributor level.

Notely said the new, more comprehensive climate policy will help improve the image of the the province's energy sector. Several industry leaders joined Notley for today's announcement.

"We got a wake up call in the form of a kick in the teeth" from the US government, when President Barack Obama rejected Transcanada's Keystone XL pipeline, Notley said. Hopefully the new climate plan will "de-escalate the conflict world-wide over the oil sands," she said.

The province will keep its long-running carbon-intensity program for major emitters, known as the Specified Gas Emitters Regulation. But it will change the program so that the targets are set to product-based emissions performance standards.

That includes specific emissions performance standards for the oil sands sector, with operations getting some free emissions permits based on the carbon-intensity performance of the best 25pc of facilities in the sector.

Facilities that emit more per unit of output will have to buy permits from the government at C\\$30/t or from facilities that beat their targets. They also can buy credits from carbon offset projects.

"The announcement is a significant step forward for Alberta," said Canadian Natural Resources chair Murray Edwards, who said he was also speaking on behalf of colleagues at Shell, Suncor, and Cenovus. "The framework announced will allow ongoing innovation and technology investment in the oil and natural gas sector."

The province's new climate plan also calls for reducing methane emissions by 45pc by 2025, with a strategy to be developed by the province, industry and environmental groups.

The revenues from Alberta's carbon price and other pricing mechanisms will go into various emissions-reduction activities, along with rebates for consumers and small businesses. Notley said the province may adjust the carbon price based on price levels in neighboring jurisdictions.