Alberta to overtake BC on carbon reduction

Alberta is about to take the lead in reducing greenhouse gases says the non-partisan group Canada’s Ecofiscal Commission. In a recent report, they compared the four provinces that have a carbon price and concluded that Alberta will have the most stringent policy by 2020.

Canadians support carbon pricing -poll, April, 2016

Canadians support carbon pricing -poll, April, 2016

By stringent, they mean the most effective overall plan in reducing greenhouse gases in which carbon pricing is just one of five methods. Commission chair, Professor Chris Ragan, explains:

“When comparing provincial carbon pricing policies, it is useful to use metrics that take into account the various design details, such as coverage and trade that differ from policy to policy. That way we are comparing policies on a more level playing field.”

Of the five ways, carbon pricing is still the most important. For that reason, Alberta and British Columbia both have more stringent carbon pricing than Ontario and Quebec who use the cap-and-trade approach. Supporters of this approach argue that pricing alone through taxes is a misleading; that cap-and-trade will work.

The advantage of carbon pricing is that it is simple –it’s a direct tax applied at the gas pump. The cap-and-trade system uses market forces to determine the price of carbon by first setting a cap on the amount of carbon that any industry can emit and then allowing industries to buy and sell unused allowances. If one industry gets under the cap, they can sell the remainder to those who go over.

Watch out, you provinces without carbon pricing. The federal government is holding a big stick: if you don’t implement carbon pricing, the feds will. Federal Environment Minister Catherine McKenna said all governments will have to increase the stringency of their climate policies, including carbon pricing, in order for Canada to meet its international commitments.

Provinces aren’t used to federal leadership. In the past, the feds have been notoriously negligent in reducing greenhouse gases. As a result, Canada has become a international slacker in the fight to confront the global threat of climate change. Under the Chrétien Liberals, promises were made but never kept. Under the Harper Conservatives, no promises were made and provinces did as they pleased.

Several premiers have voiced opposition to any federal price on carbon – including Saskatchewan’s Brad Wall, Quebec’s Philippe Couillard and Nova Scotia’s Stephen McNeil.

Meanwhile, the clock is ticking, reports the Globe and Mail (July 27, 2016) and the commission’s report is timely. “Its report informs talks between Ottawa, the provinces and the territories as they attempt to reach a pan-Canadian climate strategy this fall. Officials are working through the summer on a series of policy issues, including efforts to forge a minimum national carbon price.”

While B.C. can take some pride in being the first province to implement carbon pricing, that lead is in jeopardy. With a B.C. election in less than a year, Premier Clark will have to walk the line between satisfying the business community that opposes higher carbon taxes and the progressive community who wants B.C. to keep the lead in the carbon-reduction.

Why carbon storage won’t save us

Politicians can be expected to act irrationally during election years. By that measure, Saskatchewan Premier Brad Wall is acting as expected.

SaskPower

A rational, albeit flawed, argument is that Saskatchewan can produce clean electricity from dirty coal by capturing the carbon and selling it. It’s the equivalent of selling your garbage.

Carbon capture holds promise to rescue Premier Wall from a problem of geography. Unlike B.C., Saskatchewan has few hydro dams and lots of coal. In promoting carbon capture, Wall attempts to position himself both as a climate defender and friend of Big Coal.

At first glance carbon capture seems magical. The technology works some of the time and Cenovus Energy of Calgary agreed to buy the carbon dioxide from Saskpower. The plan is for Cenovus to buy all of the CO2 produced by the Boundary Dam generating/capture site, a total of one Mega tonnes a year. Cenovus use some of the CO2 to pressurize old oil wells near Weyburn, forcing the remains up to the surface and some would be simply be stored in underground caverns.

Irrationality number one: CO2 would be captured, then used to recover more fossil fuels which would be burned to produce more CO2.

Then there’s Wall’s obstinate posturing in advance of the meeting of the premiers with Prime Minister Justin Trudeau for talks on a national climate strategy on March 3. The feds hope to have a deal in place for a minimum carbon price that would allow provinces to use their own mechanisms to achieve the pricing. They aim to have a deal with a minimum of $15/tonne in six months.

Wall flatly rejects a broad-based carbon tax: “I’ve already made it clear … that if we’re re-elected, our government will not be pursuing any tax increases or new taxes, and neither would we support any new national taxes.”

Irrationality number two: The Saskatchewan premier doesn’t want a level playing field. He wants other provinces to pay for carbon pricing so his province would have a competitive advantage. Alberta has plans for a price of $30/tonne. “I don’t want a level playing field for our province. I want this to be the most competitive place that it possibly can be … and that does not include a new carbon tax, especially now, given the state of the economy.”

That leads to the third irrationality. My question is this: “If your carbon capture technology works so well, premier, why worry about pricing carbon that you won’t produce?” Carbon in the ground won’t cost producers anything.

The embarrassing answer is that the technology doesn’t work that well. When the plant is working properly, it captures 90 per cent of the carbon dioxide but, in fact, because of mechanical issues, the facility has only operates 45 per cent of the time. It works so poorly that Saskpower has to pay penalties to Cenovus for not supplying enough CO2 as specified in their contract.

The problem is not unique to Saskatchewan. There are only 15 such sites in the world. China has abandoned theirs. The costly, complicated technology is wishful thinking. Its chief product is political irrationality in election years.