Alberta’s new carbon tax should fund the shift to sustainability

The Alberta government’s levy of a $30 a tonne tax on fossil fuel emissions is a welcome and necessary measure — one that will generate significant revenue, ideally to cope with the climate crisis. And fund the economic shift Alberta needs.

It sets Alberta on track to robustly pursue a green future, a transition made all the more urgent as we struggle to adapt to climate change, and mitigate its most extreme effects. And in doing so, share the fruits of Alberta’s resource wealth, and knowledge economy, for the benefit of the planet.

A decade ago, I assisted the provincial government with evoking a “green future”, as set out in the report of the Premier’s Council on Alberta’s Economic Future.  I elaborated on those policy proposals in my 2009 book Green Oil: Clean Energy for the 21st Century?

Alas, the Premier of the day, Ed Stelmach, was driven from office by a rampant oil patch for daring to propose a modest increase in Alberta’s fossil fuel royalties, which remain among the lowest on the planet.

The momentum for a robust, government-led shift to sustainability faded away.

Mr. Stelmach’s eventual successor, Rachel Notley, revived and pressed ahead with this necessary shift, fueled by a broad-based carbon tax on fossil fuel consumption.

Ms. Notley’s successor, Jason Kenney, has shifted from a direct consumption tax to a less-visible production tax — the end cost is still borne by the consumer — to ensure Alberta remains aligned with the Government of Canada’s carbon taxation policy.

Essentially, provinces can either have their own carbon taxation, which keeps the revenues in the province, or accept the federal carbon tax, which takes money out of the province.

In imposing a $30 per tonne carbon tax on large industrial emitters — the highest rate ever levied by any Alberta government — Mr. Kenney has wisely abandoned the flim-flam rhetoric of “eliminating” carbon taxation.

While that pledge might have been useful to rile voters in the heat of an election campaign, it was hardly a tenable position for a provincial premier who would logically wish to avoid a further transfer of tax revenues to the central government.

 He has however changed the name of his carbon tax to give himself political cover.

 Perhaps a necessity, in a charged climate where many Albertans disaffected by the politics of the day openly engage in sedition (about six per cent of the population has signed on to a social media group discussing a “Wexit”).

Yet the central argument I advanced a decade ago remains.

The moral justification for developing Alberta’s abundant fossil fuel resources, in a world struggling to face the challenges of climate change, is to use the proceeds to significantly reduce carbon emissions from fossil fuel use.

And to  fund the research, development, and commercialisation needed to ensure Alberta and Canada remain an energy superpower.

With robust revenues foreseen from Alberta’s updated carbon tax — the Kenney levy rises to $50 per tonne of carbon dioxide emissions in 2022 —  it is surely time to fund a necessary change in economic direction. Towards an “all of the above” energy policy.

 Ideally, one that constrains government from picking “winners and losers.”

And takes advantage of Alberta’s significant strength and expertise in knowledge-based industries.

The innovation-fed extraction of oil sands is a prime example of applied research and development in the knowledge-based economy.

 Applied science has already eliminated the need for tailings ponds.

 The impending commercial application of technology to produce bitumen in situ with little or no water is another astonishing innovation.

 Indeed, the Kenney government would do well to convert its proposed Technological Innovation and Emissions Reduction Fund (TIER) into an Energy Transition Fund.

With the new carbon levy set at $50 per tonne for 2022, significantly higher than the carbon tax the Kenney government “abolished” upon taking office, the fund can enjoy steady and sustainable revenue for years to come.

The Energy Transition Fund would  provide predictable and consistent support to continue with significant reductions in the carbon footprint of fossil fuel production. And abet the transition to energy platforms that will enable us to cope with climate change.

Alberta is well placed to take advantage of this shift. The technology sector in Alberta already employs five times as many workers as the fossil fuel sector, with significantly less government support and subvention than the fossil fuel industry.

In fact Calgary’s economic development authority has embarked on an advertising campaign to lure workers to fill the several thousand tech job vacancies,  that are impeding Calgary’s transition away from yesterday’s fossil-fuel dominance.

This market-led evolution is a wrenching blow for the many thousand displaced fossil fuel sector workers who have scant hope of ever recovering their six-figure annual incomes.

One of the best uses of carbon tax revenue would be to help these highly trained and highly skilled members of our communities, to gain the additional skills and capacity they need to flourish in a changing world.

In fact, it is cruel to foster illusions of “another oil boom” which would ever revive the thousands of jobs lost in the 2014 collapse of global oil prices.

It  is clear that energy companies are finding profitability through automation; requiring many fewer humans to produce ever larger quantities of fossil fuels.

And the high-tech drilling rigs which once defined Canada’s world-leading extraction technology continue to move out of our country to pursue opportunities in the United States, perhaps never to return.

There is little to be gained by looking over our shoulder, hoping the past will come back.  We are always better when we lift our gaze to the horizon, and move forward to make the best of the future.

Specific ideas on how we might structure the transition, and the opportunities we can usefully pursue, are set out in a chapter of my new book Us.

Us is widely available in bookshops and digital platforms, offering innovative solutions in the chapter “Greening our planet, greening our growth.”

As always, I welcome feedback and conversation. Please join the conversation at The Community of Us on Facebook, and the social media links on usthebook.ca