The Canadian province of Alberta initiated a first-ever “carbon tax” in North America on Sunday that will place strict emission limits on the province’s oil sector, and cost taxpayers an estimated $3 billion annually in the form of higher energy prices.
The announcement could be a harbinger for the increased costs of policies to curb greenhouse gases, as other countries, including the U.S., move to secure a global deal on emissions reductions in Paris next week.
In the United States, Republicans have stepped up their criticism of any emissions deal and say it will drive up the cost of electricity in the United States, despite efforts by the Obama administration to downplay such scenarios.
Although the cost of stopping emissions is high, Alberta Premier Rachel Notley said “low- and middle-income families will get support to help them make ends meet.” She said she was convinced Alberta’s residents will willingly pay higher prices for electricity as a result of the emissions cap, but said the revenues collected under the carbon tax will be returned to help those in need.
“I think that ultimately we’ll be able to manage this in a way that encourages reduced use of high-emission activities, while at the same time ensuring we don’t put an unnecessary burden on families,” said Notley.
“A price on carbon provides an incentive for everyone to reduce greenhouse gas pollution that causes climate change,” said the Alberta government. The provincial government will phase in this pricing in two steps: $20 per metric ton of emissions economy-wide in January 2017; and $30 per metric ton in January 2018.
For the province’s oil sands, an emissions limit of 100 metric megatons will be set. Rules to reduce methane emissions will also go into effect.
The announcement comes after years of criticism that Canada’s largest oil-producing province hasn’t done enough to reduce emissions.
The province has been at the center of a fight to build a pipeline, called Keystone XL, to connect the province’s massive oil production to U.S. refiners on the Gulf Coast. President Obama killed the project earlier this month, after seven years of delays. Obama said the pipeline was not necessary at this time given a number of factors, including the growing need to reduce emissions in response to climate change.
Alberta will also increase renewable energy while phasing out coal-fired electricity generation.
Nations will converge Nov. 30-Dec. 11 in Paris to hash out a global deal on emissions reductions.
