UCP finance critic opposes carbon changes

By Collin Gallant on December 9, 2017.

cgallant@medicinehatnews.com @CollinGallant

Alberta’s environment minister says changes to how large polluters pay for carbon dioxide emissions will return money to the private sector in grants to help spur industry scale refurbishments across the province.

However, local MLA Drew Barnes, the opposition finance critic, says it punishes industry and will create a system of “winners and losers” picked by government.

“It’s another burden on job providers and wealth creators,” said Barnes.

“We’ve seen this government get into bed with big business. They’re all about big government.

“If businesses have to line up (to access grants) we’ll see political favouritism more and more. In Cypress-Medicine Hat, we’ve never been the winners of quote-unquote favouritism.”

Barnes’s riding of Cypress-Medicine Hat includes two huge natural gas straddle plants near Empress, and borders Medicine Hat, where four facilities exceed a 100,000-tonne of CO2 each year.

Production plants above that level are exempt from the general carbon levy, but subject to a decade-old system that also prices carbon.

Since 2007, they have paid into a carbon offset credit program known as the Specified Gas Emitters Regulation, or SGER, if they failed to reach reduction targets based on their own plant’s CO2 production.

The New Democrats signalled in 2015 they would update the plan, and on Wednesday announced its replacement, the Carbon Competitiveness Incentive program.

It sets new industry-wide benchmarks for individual sectors, and rewards one out of four producers in each sector with offset credits, while others would need to buy credits or pay a $30 per tonne fee.

The United Conservative Party claims it could cost industry $1.2 billion over four years.

Environment Minister Shannon Phillips called it the start of a “race to the top” and would give reason for companies to invest with the help from a $400-million industry fund.

“It will make our industries more resilient,” said Phillips. “Investors are demanding that companies take credible climate action.

“On balance there will be a positive economic effect.”

As structured, about three-quarters of plants would pay into the system.

The City of Medicine Hat’s power plant would continue to buy credits, officials said this week, but also that changes wouldn’t affect the 2018 budget. It already assumed SGER payments, meaning there could be relatively little change in compliance costs.

The largest CO2 producer in the region, CF industries, stated it needs more time to study the changes and how it might affect their bottomline.

Officials with Methanex stated they are still awaiting official word of their compliance level.

“Methanex is supportive of the Alberta government’s approach to refining the regulation for large emitters, and we have been participating in the industry consultations,” read a statement from Paul Daoust, the company’s vice-president of North American operations.

The new system would rank all facilities in specific sectors on a carbon per unit produced. That becomes more difficult when there are relatively few entries in a sector, such as with Methanex, or local firm Cancarb. They are the only plants in Alberta that produce methanol and carbon black, respectively.

Officials tell the News provisions are being made to include and account for one-off industries.

Barnes believes Alberta companies should be allowed to compete without a carbon price or compliance costs, and should be rewarded for work already done toward lowering emissions.

“They’re not doing that,” said Barnes. “We’re going to have politicians and bureaucrats deciding who wins.”

Phillips says industry players have long asked that a portion of money from the SGER be put back into the system, and the new system also allows adjustments for trade-exposed industries that compete with countries that don’t have a carbon price.

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