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Alberta unveils revamped plan to tax large carbon emitters

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Alberta unveils revamped plan to tax large carbon emitters

Alberta's 100 largest greenhouse gas emitters will face new rules Jan. 1, 2018, that reward low emitters and punish those with more intensive output.

The province unveiled its Carbon Competitiveness Incentives plan Dec. 6, which it said will attract investment in so-called green technologies while reducing emissions. The plan will apply to any facility that emits more than 100,000 tonnes of greenhouse gases annually and give companies credits if their output is lower than a government benchmark. If they exceed the benchmark amount, which is set on a sector-by-sector basis, they will have to purchase offsets or pay a C$30/tonne levy.

The province expects to program will raise C$1.2 billion annually when the levy comes into full effect in 2020, although with offsets the government's take will be closer to C$800 million. Alberta is phasing in the new regulations, with industry paying 50% of the cost in 2018, 75% in 2019 and the full amount in 2020. Environment Minister Shannon Phillips said in a press conference the government expects the regulations to cut 20 million tonnes of emissions by 2020 and 50 million tonnes by 2030. The new rules replace the government's Specified Gas Emitters Regulation, which will expire at the end of the year.

"To expand the modern economy and create good jobs for Albertans, we need to lead in the push to reduce the carbon footprint of our export products so they can better compete globally," Phillips said in a statement. "That's what these improved rules will do."

SNL Image

Suncor Energy's new Fort Hills oil sands mine. Suncor will be one of dozens of Alberta companies affected by a new climate change-mitigation program.

Suncor Energy Inc. photo

The new rules were introduced a day after the government announced C$1.4 billion in incentives over seven years for projects that will reduce carbon output. While those programs will provide some relief, high emitters like oil sands operators and refiners could face higher costs if they cannot reduce their carbon output. Phillips said the climate change-mitigation programs would bring new jobs to the province.

Benchmarks will be applied to sectors like power generation, cement manufacturing, oil sands production and refining. Canada's biggest oil sands producers include Suncor Energy Inc., Exxon Mobil Corp.'s Canadian units and Canadian Natural Resources Ltd.

The government said it consulted extensively with industry before introducing the new rules. It said the incentive program for carbon-reduction initiatives includes C$440 million earmarked for the oil sands industry. The new program builds on the government's Climate Leadership Plan which was introduced in 2015. It included a cap on new oil sands emissions and a sweeping carbon tax.