Canadian Manufacturing

Ottawa needs compliance levy, not carbon tax, CCEMC head says

Eric Newell said companies have greater acceptance for compliance levy on large emitters



EDMONTON—The Harper government needs to get moving on long-awaited regulations for the oil and gas industry, says the head of the Alberta agency that manages the province’s effort to reduce industrial carbon dioxide emissions.

Eric Newell of the Climate Change and Emissions Management Corp. (CCEMC) says he has a way for Ottawa to put a price on greenhouse gases without mentioning the two words that give federal Conservatives the heebie-jeebies.

“I’d like to distinguish between a carbon tax—which is universal at the pumps—and what we have here in Alberta, which is a compliance levy on large emitters,” said Newell, whose agency manages and invests money collected from companies that exceed their carbon allotment.

“I think they’re quite different. They’re different target audiences. I would say there’s a lot greater acceptance for a compliance levy on large emitters—including by the large emitters.”

The Harper government had originally promised regulations on reducing greenhouse gas (GHG) emissions from the energy industry by last January.

The deadline was later revised to this summer.

Since then, Environment Minister Leona Aglukkaq has removed any timeline at all.

Speculation has pegged an announcement for the fall, with some form of carbon price of up to $40 a tonne.

Newell, who’s been head of the agency since its launch in 2009, said Ottawa should not only be setting a price on carbon, it should be moving faster.

“I think we need to get moving, get started on this,” he said. “How long have we been fooling around with these oil and gas (regulations), the feds and the province?”

Newell points to the Alberta model, in which large industrial emitters must reduce the amount of carbon they emit for every barrel of oil they produce by 12 per cent below their 2004-05 level.

If they don’t reach the target, they have the option of paying $15 per tonne into the fund Newell’s organization manages.

“This is not a carbon tax per se,” said Newell. “It’s a very targeted program to create the incentive and give the certainty to industry they need to get going on innovative technology.”

Newell also suggested that incentive needs to be ramped up.

“(The price) should be higher,” he said. “$15 a tonne is too low.”

So far, the corporation has collected $380 million and directed $212 million of it to 50 projects on climate adaptation, renewables and energy efficiency.

Recipients have leveraged that money to create $1.6 billion in investment.

Newell acknowledges that so-called intensity reductions won’t bring Alberta’s GHG emissions down to targeted levels.

“We’ve got to come up with an absolute reduction in emissions, not per barrel. We’ve got to keep doing that, too, but we’ve got to make an absolute reduction,” he said.

“That means we need transformative technology. Transformative technology takes patient capital and that’s where something like the technology fund that we’ve created comes into play.”

Some in Ottawa have shown interest in creating a federal counterpart to the Alberta corporation, Newell said, but others in the government are reluctant to approach anything that smacks of a carbon tax.

“I think that is part of the problem,” he said. “There’s a lot more politics tied up in this than we would like to believe.”

Fossil fuels aren’t going away, said Newell.

It’s time federal and provincial governments started to get serious about ways to mitigate their effects.

“If you don’t have a price signal of some sort on carbon, how do you ever justify carbon capture and storage?” Newell said. “If you’ve got a signal out there and it’s worth some dollars, it’s easier to get people to support projects that do that.”

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