Principles for smart climate change policy

The following is AEG’s monthly column by AEG President Josh Bilyk appearing in the October edition of Business in Edmonton Magazine. If you have tips or suggestions for future columns, please feel free to write or call. 

The Alberta government is going to do something on the climate change file. Just what that something is, we do not know. It’s safe to say, however, that it won’t be cheap and we’ll all pay for it.

During the election the NDP pledged to make Alberta a climate leader and within a couple months of the election established the Climate Change Advisory Panel. Chaired by University of Alberta economics Professor Andrew Leach, the panel is tasked with providing a series of scenarios under which the government can reduce Alberta’s carbon emissions.

During a meeting with AEG members, Dr. Leach explained that “all options are on the table” for the province, and that no decision has been made. The government will look at an array of policy tools that will help reduce Alberta’s emissions – which may include guaranteed prices for solar and wind, carbon taxes “cap and trade” and a variety of other mechanisms.

“Climate action” by the province is inevitable, so perhaps we should set down some general principles to guide the provincial government as it embarks on this risky policy adventure.

1)      Whatever the government does on GHGs, it should be revenue neutral for government. Alberta business and individuals have already been hit with tax increases. On the business side – a 20 per cent hike in corporate taxes and a doubling of the industrial carbon levy are hitting industry when they can least afford it. Whatever the mechanism for “pricing” carbon they choose to adopt – for every additional dollar collected by the government there should be an offsetting reduction in other taxes. A good start would be rolling back the corporate tax hike and increasing the Basic Personal Exemption so low income earners are protected from rising energy bills. A climate action plan shouldn’t be a cash grab, but with a mess of a budget, it sure will be tempting for politicians.

2)      A price on carbon should apply to everyone and everything – not just industry. We’re trying to improve our environmental performance, right? We know that 80 per cent of emissions come out the tail pipe – and not from the extraction and refining of hydrocarbons. Climate change is consumer-driven problem. Any “carbon pricing” policy adopted by the province should treat carbon emissions of any kind the same. For guidance, look to British Columbia where carbon tax applies to the purchase or use of fuels such as gasoline, diesel, natural gas, heating fuel, propane and coal, and to peat and tires when used to produce energy or heat. They also commit to returning every penny collected to taxpayers through significant income tax reductions and other credits. Consumers won’t like it, but that’s the point.

3)      Reject complicated cap and trade systems that would transfer Alberta prosperity to other jurisdictions. We supply energy for consumers around the world and we shouldn’t be penalized for it. We applaud Premier Notley’s position during the federal election that Alberta would opt out of any program that transferred dollars out of the province. An internal cap and trade system is also complicated and too easy to manipulate.

4)      Don’t pick winners and losers in the energy market and avoid subsidies of any kind. The market and technology will decide how power is generated for Albertans – not politicians. Look no further than Ontario, which, after much political meddling, is seeing soaring power rates. If wind power can compete with coal or natural gas once a price on carbon is set, so be it. Let the chips fall where they may.

5)      Don’t kick industry when it’s down. Let’s be honest – Alberta is a fossil fuel producing province. Many Canadians rely on it for their livelihoods. Any policy adopted in Alberta should guarantee the global competitiveness of our industry. That might mean adjustments on the resource royalty side to offset the increased costs associate with a price on carbon.

“Climate action” doesn’t have to be a negative for Alberta’s business climate. We just need to maintain a competitive advantage and keep Alberta growing.

Alberta Enterprise Group is a member-based, non-profit business advocacy organization. AEG members employ more than 150,000 Canadians in all sectors of the economy. Visit www.albertaenterprise.com to inquire about membership in the AEG movement.