Climate Leadership Plan

The Government of Alberta (Alberta) released its Climate Leadership Plan (PDF) in November 2015. The Plan outlined many proposed changes to the Province’s energy and related environmental policy. The Plan’s main objectives are “phasing out coal-generated electricity and developing more renewable energy, implementing a new carbon price on GHG pollution, legislating an oil sands emission limit, and employing a new methane emission reduction plan.”[1] The Plan also emphasizes energy efficiency and technology and innovation. The Plan sets an overall target of stabilizing current total emission levels by the year 2030. The main source of Alberta’s climate change legislation remains the Climate Change and Emissions Management Act[2] and its regulations, however this legislation is likely to significantly change over the next few years if the Plan is implemented as proposed.

Renewable Electricity Program

As part of the Plan, Alberta instructed the Alberta Energy System Operator (AESO) to develop and implement a program to introduce new renewable electricity sources to the grid while maintaining the current competitive market structure. In response, the AESO has begun to develop the Renewable Electricity Program (REP). As part of this process, the AESO requested input from developers and investors with respect to the proposed REP.

In an Update to Stakeholders released on May 10, 2016, the AESO summarized four details that, while not yet approved by Alberta, it anticipates will define and form the scope of the REP:

  • The definition of “renewable” is anticipated to align with the definition used by Natural Resources Canada;
  • The procurement is anticipated to be fuel-neutral;
  • Facilities may be expected to be in-service in 2019; and
  • It is anticipated that the existing transmission system will be leveraged, possibly signalling a preference for projects that make use of existing transmission infrastructure.

The Update to Stakeholders also summarized the input received from developers and investors, including considerations for and barriers to investment in renewable energy sources and additional information needs. The AESO anticipates the launch of the first REP procurement will be held later this year.

Climate Leadership Implementation Act

  • Set Alberta’s carbon levy and carbon levy rebate;
  • Ensure revenue from the carbon levy is invested into actions that address climate change;
  • Establish Energy Efficiency Alberta, the purpose of which is to develop and deliver provincial-scale energy efficiency and small scale renewable programs and services; and
  • Amend the Corporate Tax Act[6] in order to reduce the small business tax rate from 3% to 2% starting on January 1, 2017.

While many details will be forthcoming in the regulations, Alberta has committed to a $20 per tonne carbon levy starting on January 1, 2017, with an increase to $30 per tonne starting on January 1, 2018. This levy would apply to all fuel consumption, including gasoline and natural gas, but with some exceptions such as fuel used for farming operations[7]. It also provides that directors will be personally liable for any levy payments that their corporation fails to remit[8].

Conclusion

Over the last six months Alberta has released detailed plans for reform of the province’s energy and environmental landscape and is now taking substantive steps to implement those plans. While some aspects will be maintained, such as the competitive market structure for electricity, others will require significant change to realize the objectives of these plans. It will be important for companies affected by these changes to remain apprised of new developments and their implications. Look out for future bulletins from Fasken Martineau on developments relating to Alberta’s energy and related environmental policy and legislation.