Feds okay with new Alberta pollution pricing approach
Canadians see the costs of a changing climate all around them. Climate change is driving stronger storms, wildfires, and record-breaking heatwaves. Canadians also know that taking climate action is an enormous opportunity to create jobs and advance economic growth.
A price on pollution is one of the best tools we have to fight climate change while keeping life affordable for Canadian families.
Minister of Environment and Climate Change Jonathan Wilkinson announced that Alberta's Technology Innovation and Emissions Reduction Regulation meets the federal government's stringency benchmark criteria for carbon-pollution pricing systems, for 2020, for the emission sources they cover. The Regulation will go into effect on January 1, 2020, replacing Alberta's previous approach to pricing pollution from industry. As a result, the federal output-based carbon-pricing system, the large industry portion of the backstop, will not go into effect in Alberta.
"Canadians voted for climate action in this fall's federal election. A price on pollution helps deliver the clean growth that Canadians want to see. It's good news that Alberta's government has adopted an effective price on carbon pollution for its industry sectors, building on over a decade of experience with pricing pollution from industry in Alberta. We congratulate Alberta for moving forward to price pollution from industry," said Wilkinson.
The Regulation set a price of $30 per tonne on emissions from industrial sectors such as oil and gas, electricity, cement, agriculture, and others.
As in all other provinces and territories that have adopted their own price on carbon pollution, Alberta's Technology Innovation and Emissions Reduction (TIER) system will be subject to annual reviews to ensure it remains in compliance with the federal benchmark. The benchmark price rises to $40 per tonne in 2021 and $50 per tonne in 2022.
"Climate change is real, and Canadians right across the country are seeing its effects. Alberta's decision to use carbon-pollution pricing to address industry emissions makes sense: It's the most economically efficient way to reduce carbon pollution while making sure that industry can continue to compete and succeed," stated Minister of Finance Bill Morneau. "As Albertans join other Canadians in helping reduce the carbon pollution that causes climate change, everyone will benefit."
The federal price on pollution has two components: a fuel charge across the economy and a pricing system for heavy industrial sectors that face international competition. Today's announcement relates to the pricing system for heavy industry. With regard to the fuel charge, Alberta's government made the decision to cancel the province's carbon levy last May. This means the federal fuel charge will go into effect in Alberta, on January 1, 2020.
All direct proceeds from the federal fuel charge will go back to Alberta, with the vast majority of those proceeds returned to people of the province through climate action incentive payments. A family of four will receive a climate action incentive payment of $888 after they file their taxes next year, and most families will receive more back than the costs they see from the price on pollution. The remainder of the direct proceeds will support small and medium-sized businesses, municipalities, schools and hospitals, Indigenous communities, and others.
As part of the Pan-Canadian Framework, Canada's climate plan, governments are committed to reviewing the approach to pricing pollution by early 2022, with an interim review in 2020. The interim review of pollution pricing will focus on best practices to address the competitiveness of emissions-intensive trade-exposed sectors.
- Canada's climate plan gave provinces the flexibility to design a carbon-pricing system that meets their unique needs while ensuring all systems are stringent, fair, and efficient.
- Pricing carbon pollution has a proven record—across Canada and the world—of reducing the carbon emissions that cause climate change while encouraging innovation and maintaining strong economic growth.
- In support of today's announcement, the Department of Finance Canada has released a set of draft regulatory proposals under the Greenhouse Gas Pollution Pricing Act to facilitate the integration of TIER facilities with the federal fuel charge. The regulatory proposals also include measures to ensure other relief related to the federal fuel charge applies appropriately in Alberta, including relief provided to greenhouse operators, remote power-plant operators, and fishers.