Alberta carbon tax kicks in on New Years Day, sets a new signal

Cross-posted from the Edmonton Journal, 1 Jan 2017

Deputy premier Sarah Hoffman wants Albertans to look at the long game when it comes to the carbon tax, which kicked in on New Years Day.

The effect of the $20-per-tonne carbon pricing, introduced by government as part of its climate leadership plan, was immediately obvious on gas prices.

The tax hikes the cost of gasoline by 4.49 cents per litre, and diesel by 5.35 cents.

Gas Buddy was reporting prices as high as $1.12 per litre in the Edmonton area at noon, though prices as low as $0.96 could still be found at some locations. The average price was $1.08 and trending up. That’s two cents higher than the average reported the afternoon of Dec. 31.

The province plans to syphon expected carbon tax revenues of $9.6 billion back into the economy by way of diversifying the energy industry, or rebate it back to low- and middle-income Albertans.

It’s earmarked $3.4 billion for large scale renewable energy, bioenergy and technology, $2.2 billion for green infrastructure like public transit, and $645 million for Energy Efficiency Alberta, a new provincial agency supporting energy efficiency programs and services for homes and businesses.

Around $2.3 billion will go towards carbon rebates, $865 million will pay for cutting the small business tax rate from three to two per cent, and $195 million is planned to assist coal communities, indigenous communities and others transition to a cleaner economy.

Hoffman acknowledged people probably aren’t going to be happy about the 4.5-cent carbon tax on gas, but she suspects everyone is excited about recent pipeline approvals.

“(Pipelines) are a way for me to remind myself of the long game here,” Hoffman said.

“The Prime Minister made it very clear that if we didn’t have a price on carbon, he wouldn’t have been in a position to approve those pipelines.

“While it’s four-and-a-half cents today, it’s billions of dollars for our economy and for economic diversification that’s crucially important for Albertans and Alberta communities.”

The Progressive Conservatives were quick to remind Albertans that 2017 means paying more thanks to the NDP’s carbon tax.

In a morning news release, energy and environment critic Rick Fraser called it a “wildly unpopular policy,” and criticized the government for spending $9 million on promoting the plan.  “Today marks the beginning of a sharp decline in quality of life for our province,” he said.

With files from Elise Stolte