My son’s soccer team played in a tournament in Gothenburg this past summer. As we got to know the city and Swedish countryside, I was in awe of the number of wind turbines and the extensive use of their efficient, clean, public transit system.
Back home, Canadians appear to be struggling to accept the $30/tonne carbon tax proposed by the federal government. Ontario has abandoned its Cap and Trade scheme and next week, the Saskatchewan government takes the carbon tax to its Court of Appeal. I had to wonder, “What does Sweden do?”
$164/tonne, actually, since 1990. They first imposed the tax, along with other fuel levies, at $35/tonne, and have slowly ramped it up over the years. Their GDP continued to increase in that same time period. Today? Their carbon emissions are 26% below their 1990 levels.
Now, Canada isn’t Sweden. The main difference? Sweden, along with many countries, are simply fossil fuel consumers. Canada is both a consumer and a major producer of oil and gas. This muddies the waters significantly. This doesn’t mean we shouldn’t pursue carbon legislation. In fact, it makes it even more important we understand what we are doing.
I don’t intend to wade deeply into those waters. I simply intend to present some of the basics in this article, particularly the math, in the hopes it will help people digest the issue as the debates heat up, yet again.
First Things First – What was our commitment in Paris?
In December 2015, Canada, and 194 other countries, signed the first ever universal and legally binding plan, “The Paris Agreement”, to keep global temperatures below a 2 C rise with a provision to aim half a degree lower.
Countries, including Canada, submitted national climate action plans in advance of Paris. Although these plans are recognized to fall short of the 2 C target, they form a starting point for Canada’s engagement.
Canada has committed to reduce emissions approximately 30% from our 2005 baseline by the year 2030. In 2005, we emitted 722 Mt (mega-tonnes) of greenhouse gases. Our international target is 523 Mt/year so we need to reduce our emissions by 199 Mt/year.
What’s our Starting Point?
Canada’s greenhouse gas emissions in 2016 were 704 Mt of CO2 equivalent or “CO2e” for short. Our emissions have continued to grow since 1990. Our share of emissions is a mere 1.6% of the world total but we are in the top 10 emitters list. China holds the top spot (30%) and the U.S. comes in second (15%).
If we look at the emissions by province we can see where we have to focus.
There are some things we can learn from this chart. First, in terms of emissions, really only three provinces matter; Ontario, Quebec, and Alberta. Saskatchewan and British Columbia hold the middle ground, while Manitoba, Atlantic Canada and the Territories barely register.
Second, provinces, like Quebec and British Columbia, who can generate some or all of their electricity from hydro have a huge advantage in terms of avoiding carbon emissions from coal-fired generators. Overall, Canada generates 59% of its electricity this way.
Third, only a few provinces have reduced emissions since 1990. Ontario is notable as they were billed the top emitter in 1990. However, they have since shut down the last of their coal-fired generators, and now rely primarily on nuclear power. This leaves Alberta with the top spot.
Why? There are two key reasons. First, Alberta has abundant coal deposits and still generates most of its electricity from coal. Co-generation, wind, and solar have trickled into the mix, but overall the sector accounts for 22% of Alberta’s emissions. Second, the oil and gas sector is a significant emitter and accounts for 33% of all carbon emitted from the province. Even though most of Alberta’s oil and gas products are used elsewhere, the upstream emissions are counted here.
What legislation is in place or proposed?
Alberta and British Columbia each have a carbon price: $30/tonne in Alberta and $35/tonne in B.C. Alberta actually introduced the first carbon levy in Canada, back in 2007, but it only covered industrial emitters until 2017. B.C. had the first economy wide tax starting in 2008. Quebec participates in a Cap and Trade program with California and Ontario was part of that agreement until recently.
The rest of Canada is expected to implement carbon pricing or similar measures as per the federal Pan Canadian Framework on Clean Growth and Climate Change by spring of this year.
Alberta based its approach on the Climate Leadership Plan (the “CLP”) which was chaired by Andrew Leach at the University of Alberta and based on recommendations from a provincial advisory panel. Measures in the CLP range from carbon pricing to a coal phase-out. The projected reductions are 12% over a “do nothing case”. In fact, the “do nothing case” in Alberta results in continued growth of emissions, so the CLP just aims to keep that in check.
The federal plan projects it can achieve 89 Mt/year in emissions reductions if all its measures are implemented. Even if that is achieved, it is only halfway towards our Paris Agreement.
So what will we pay?
Alberta’s CLP and pricing is pretty similar to the federal plan so these estimates can generally apply across the provinces.
At $30/tonne, the Alberta government estimates we are paying:
• 6.73 cents per litre of gasoline
• 8.03 c/litre of diesel
• $1.52 /GJ of natural gas
They also estimate the cost for a typical family of four to be $508/year. Carbon tax rebates are available to lower income families; for example, a family of four could see a rebate of $540/year.
What about small businesses and farmers?
Alberta’s plan provides some relief for small businesses and farmers.
Alberta lowered the small business tax from 3% to 2% in 2017 to reduce costs for small business in anticipation of carbon levy impacts.
As well, certain fuels used in farm operations are completely exempt; marked diesel and gasoline. Financial assistance for energy management, solar equipment, and efficiency work was also set aside for farmers.
What about large industry?
In Alberta, large industry is treated significantly different from individuals and small business. Specifically a system called “Output Based Allocations” gives large emitters a baseline of free emissions credits before they have to pay the carbon tax. The federal system now aims to adopt the same philosophy.
The Carbon Tax for Dummies – Part 2:
I will talk more about the Alberta large emitters and also examine some other questions in Part 2: “Will the carbon tax work?”, Does Canada even matter in the big scheme of things? and “Are there alternatives?”
The key take-aways from this article are:
• Canada’s greenhouse gas emissions were 704 Mt/year in 2016
• Canada has committed internationally to reduce emissions by 199 Mt/year by 2030
• Canada’s federal plan projects reductions of as much as 89 Mt/year
• Two provinces have carbon taxes now: Alberta ($30/tonne) and B.C. ($35/tonne) and Quebec has a Cap and Trade plan
• Gasoline prices would rise about 6.73 cents/litre for a $30/tonne carbon tax
Alisa Caswell has a degree in chemical engineering. She spent twenty years working in the oil and gas industry, including roles in operations and energy conservation. She previously held the position of Chair – Oil Sands, Canadian Industry Program for Energy Conservation (CIPEC). She lives in Fort McMurray, Alberta. Follow “Confessions of a Dandelion Anarchist” or follow her on facebook.
References and Links:
 Photo by Alexis Sidor on Unsplash