On Nov. 22, 2015, Alberta Premier Rachel Notely made a much anticipated announcement about the future of Canada’s heaviest greenhouse gas emitter: a carbon tax is coming. Intended for implementation by 2017, the economy-wide carbon tax is set to have both provincial and national implications. Along with the tax, the Provincial government’s Climate Leadership Plan includes a cap on emissions from the oilsands, and a phase-out of coal-powered electricity generation. This timely announcement comes as Canada prepares for next week’s UN Paris Conference.

The Carbon Tax

The details of Alberta’s plan will unravel in the coming months but the Province has already received praise for setting the carbon tax at what many economists and environmentalists consider a reasonable level. Beginning in 2017, the tax will be set at $20 per tonne, rising to $30 in 2018 and followed by a 2% above inflation rate thereafter. The predicted result is an increase of gasoline prices by roughly 7% by 2018 and an annual increase in heating and transportation costs per household by roughly $300-$600.  The Alberta government promised to offset this burden with rebates for lower income households. The new carbon tax is expected to raise $3-billion annually by 2018, but unlike British Columbia’s carbon tax, will not reduce other provincial taxes. The Alberta government anticipates using these new revenues to fund renewable technology, green infrastructure and transit. 

Phasing Out Coal and Capping Oilsands Carbon Emissions

The plan also features a phase out of coal-fired power in the next 15 years, a 10-year goal to cut methane emissions in half and incentives for using renewable energy. The plan also encompasses a 100-megatonne cap on carbon emissions from the oilsands, which notably still allows the industry room to grow as the oilsands currently emit roughly 70-megatonnes annually.

The UN Paris Conference

Alberta’s announcement comes after the new federal government promised that Canada would be a key player in moving the greenhouse gas discussion forward at the upcoming UN Paris Conference. As part of this commitment, Mr. Trudeau promised to work with the provinces to establish a pan-Canadian framework for combating climate change, including the implementation of national emissions reduction targets. Mr. Trudeau has specified a timeline of 90 days after the UN Paris Conference to meet with the provinces to develop this national approach. Ontario recently followed Quebec’s lead by implementing a cap and trade system, and British Columbia has had its carbon tax system in place since 2008. As detailed above, Alberta’s new plan incorporates both of these systems: a cap on its major greenhouse gas emitter as well as an economy-wide carbon tax.

Alberta’s spring budget will likely provide more details on the rebate program, and further overall financial details of the new plan.  To date Canada has not detailed a national climate change strategy but the announcement from Canada’s heaviest greenhouse gas emitter comes at a crucial time as Canada prepares for next week’s UN Paris Conference.