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Canadian Government, Provinces Mulling Price For Carbon

The price of carbon emissions across Canada should start at a minimum C$10 (US$7.60) per ton in 2018 and climb to C$50 (US$38) as of 2022, the federal government recommended Monday.

The proposal started talks on a national standard with the provincial governments, which share jurisdiction in the field. Alberta, the top source of greenhouse gases as Canada’s primary gas and oil producer, set the stage for prolonged negotiations by withholding support.

Prime Minister Justin Trudeau, announcing the plan in the House of Commons, described the scheme as an essential beginning on carrying out Canada’s global promise of a 30% reduction of national carbon emissions as of 2030.

Alberta Premier Rachel Notley promptly expressed widespread irritation in her province over federal delays in granting approvals to pipeline projects aimed at enabling exports from new tanker terminals on the Pacific and Atlantic coasts.

Notley said in a statement, “Alberta will not be supporting this proposal absent serious concurrent progress on energy infrastructure, to ensure we have the economic means to fund these policies.”

The delayed projects include TransCanada Corp.’s proposed partial conversion and extension of its national natural gas Mainline to oil service, Kinder Morgan Canada’s expansion of its Trans Mountain oil route from Edmonton to Vancouver, and Enbridge Inc.’s Northern Gateway blueprint for a new oil conduit to the northern Pacific Coast (see Daily GPI, Sept. 23).

The national carbon price proposal is the key element in a proposed cooperative climate change strategy that federal, provincial and territorial environment ministers examined Monday at a meeting in Montreal. The prime minister’s schedule calls for completion of the scheme this fall by a meeting with the premiers.

Trudeau emphasized that the federal proposal is only intended to set a minimum national standard, leaving the provinces and northern territories power to establish higher carbon prices. Revenues would go to the provincial and territorial treasuries.

The prime minister also left the door open for the provinces and territories to choose how to implement the carbon prices by enacting emissions taxes or cap-and-trade regimes. Alberta, British Columbia, Ontario and Quebec already have policies that use mixed approaches to meet or exceed the proposed national standard.

Trudeau acknowledged that jurisdictions with 80% of the national population are ahead of the climate change game with their own policies. Notley called on his year-old Liberal government to catch up with the main Canadian energy problems -- bottled-up supplies that aggravate international price erosion and gut provincial royalty revenues -- by responding to industry needs for export pipelines to markets beyond the United States.

Notley said, “It is time for the government of Canada to act on this issue. Albertans have contributed very generously for many years to national initiatives [a federally-managed provincial government revenue redistribution system known as equalization] designed to help other regions address economic challenges. What we are asking for now is that our landlock be broken, in one direction or another, so that we can get back on our feet.”

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