All Large Industrial Emitters in Alberta are subject to the Specified Gas Emitters Regulation (SGER). Emitters will continue to be subject to the SGER framework until the end of 2017, when the province will transition to product and sector-based performance standards. The government has committed to consulting with industry to set these new standards.
As of January 1, 2016, SGER requires facilities that emit 100,000 tonnes or more of greenhouse gases a year to reduce their emissions intensity by 15 percent annually, increasing to 20 percent on January 1, 2017. There are 4 ways facilities can comply:
make improvements at their facility to reduce emissions
use emission performance credits generated at facilities that achieve more than the required reductions
purchase Alberta-based carbon offset credits
contribute to Alberta’s Climate Change and Emissions Management Fund (Fund)
Facilities that contribute to the Fund pay $20 for every tonne over their reduction target. The price increases to $30 as of Jan 1, 2017.
The November 22, 2015 Climate Leadership announcement suggested that coal-fired power producers will be subject to a special carbon tax under the Carbon Competitiveness Regulation. Unlike other sectors that will be compared to their own best performers, coal-fired generators will be measured against best of class natural-gas fired generation. Producers and industry analysts have estimated a cost of $10 to $65 per MWH, which means a 100% increase on wholesale coal-fired electricity. That means your costs will go up.
By walking away from Power Purchase Agreements (PPAs), several large Alberta companies indicated the new SGER taxes were "too much too soon" and potentially force power plants to shut down prematurely -- your costs will go up. On July 25, the Government of Alberta announced it was in effect suing itself in an expensive and destructive plan to retroactively void the provisions of the original agreement that were designed to protect businesses from the very kind of hasty, thoughtless changes to law the NDP introduced last year. The NDP say they are protecting consumers, but this PR game will just cost us more money. The Government should admit they got it wrong in trying to tax coal-fired generators out of business.
The renewable energy sources the government wants to use to replace coal cannot compete with electricity generated with coal – they must be subsidized. You will pay that subsidy.
Some non-governmental organizations (NGOs) say the cost would have gone up anyway – but they’re using numbers from 2014 when Alberta’s economy was robust and growing.
The Climate Leadership Implementation Act (CLIA) will provide more details regarding how coal-fired power generation will be taxed.
What will carbon tax cost your business?
The government suggests the impact will be minimal, and have proposed a reduction of the small business income tax to 2 percent from 3 percent to help small businesses adjust.
How well this helps small businesses adjust depends completely upon their profitability, how many input costs they have that are exposed to carbon taxes (shipped goods, locally manufactured goods, etc.) and how much carbon-based fuel (gasoline, diesel, propane, and to some extent, electricity) they consume.
Every business is different, which is what makes any sweeping statement – by the Coal Association or the government or anyone else – worth nothing.
If you are not profitable – and many businesses are not in this environment – your business will have to absorb the impacts of the carbon tax starting January 1, 2017. You can do this by cutting costs, cutting employees, or finding a new way to do business.
What will carbon tax cost my community?
The government suggests the impact will be minimal, but many elected municipal officials disagree, and suggest that municipalities should be exempt. The Province says “NO” to this.
If Municipal Operating Costs go up, your taxes go up. Your Municipal Operating Costs will go up if:
your municipality operates buildings that need to be heated and lit
your municipality operates vehicles that run on gasoline, diesel, or propane
your municipality runs a library, or a recreation centre
your municipality is part of a cost sharing agreement with other municipalities for shared facilities such as leisure centres and athletic complexes
The Government has budgeted $195 million over five years to help communities adjust and to retrain employees impacted by the carbon tax. This meagre allotment is from a tax that will raise approximately $9.6 billion in the same five years.
How many jobs will the carbon tax cost?
We don’t know, but the phase out of coal, which may be underway already, will remove thousands of jobs and supporting jobs in communities throughout Alberta.
The tax itself will increase businesses’ operating costs and when combined with higher corporate taxes, higher minimum wages and higher employment costs introduced by this government, may frighten off future investment in Alberta’s traditional industries such as oil and gas, mining, and transportation.
The government is promising thousands of green jobs. But:
We don’t know where they’ll be
We don’t know what they’ll pay
We don’t know how our workforces will be retrained
We don’t know how long they will last
We do know that in Ontario, the jobs created did not offset the jobs lost due to industries closing, companies leaving, and the green jobs not measuring up in terms of salaries, benefits, or duration.