If provinces are serious about keeping the federal government out of their jurisdiction, they need to demonstrate they can work together on critical files like carbon policy.
Alberta, British Columbia and Quebec have priced carbon to help meet GHG (greenhouse gas) emission targets. Once Ontario’s system is in place, 86 per cent of Canadians will live in a province with a price on carbon. The problem is provinces have made little effort to integrate their carbon pricing systems. And fragmented systems are both inefficient and expensive.
The New West Partnership (NWP) has a strong track record of eliminating internal trade barriers – this makes the West a natural place to start harmonizing carbon policy.
The fact oil sands (Alberta) and LNG (liquid natural gas in B.C.) growth are expected to produce the lion’s share of new emissions also suggests the West should lead on carbon. The most important reason for the West to take the lead is political – simply put, the West is deeply suspicious of any scheme that appears to transfer natural resources wealth to the east.
The natural first step is for B.C., Alberta and Saskatchewan to link their carbon offset systems. This would not be too hard to achieve from a technical perspective. Each of these provinces has enacted legislation enabling mandatory emissions reductions from large industrial emitters. And all three provinces either plan to or currently provide emitters with the option of purchasing local carbon offsets to ensure regulatory compliance.
There are, however, some hurdles. Saskatchewan has indicated it will put in place a system similar to Alberta’s, but it has yet to put the regulations in place to make that happen. B.C.’s carbon tax does not include provision for offsets.
With Saskatchewan in regulation limbo and B.C. waiting to see if LNG gets off the ground, it’s not easy to link systems. A possible interim step would be for Alberta to open its carbon offset market to its NWP neighbours.
In some ways, this will be a hard sell in Alberta. If Alberta is to open its carbon offset market to B.C. and Saskatchewan, some wealth would transfer to the other two provinces and less would go to Alberta. However, a broader carbon offset market would also drive down the cost of compliance for large Alberta emitters. This would make Alberta companies more competitive at a time when low oil prices and high operating costs have made Alberta’s energy sector a tough place to do business.
With Alberta redesigning its climate strategy, this is the time for B.C. and Saskatchewan to make the case.