After Prime Minister axed the consumer carbon tax, the Conservative Party of Canada now says it will also axe the tax on large emitters, such as the Medicine Hat power plant, should it be able to form the next federal government.--NEWS FILE PHOTO
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One branch of Medicine Hat’s complicated roadmap to manage and strengthen its municipal power business could be better defined after the coming federal election.
Federal Conservative Party Leader Pierre Poilievre said Monday that if elected his party would erase the federal industrial carbon levy charged to large CO2 emitters, such as the city’s power plant.
Mitigating carbon costs was outlined as one of five key variables that local administrators say they are balancing in a local net zero strategy outlined last fall.
Within those, a potential change in federal policy frameworks after an election this year was underlined as a key area.
The economic factors related to carbon emissions could be removed from the equation, if the Conservatives form government or, alternately, if the Liberal Party responds in kind to the CPC announcement.
As well, the Alberta Government would have to follow by ending its own decades-old levy on industrial emissions which could cost the city power division an estimated $42 million per year in 2030.
“These taxes drive up the costs of the entire domestic steel industry,” said Poilievre at an event on Monday highlighting high-profile tariff issues.
A Conservative government “will repeal the entire carbon tax, including the federal backstop that requires provinces to impose industrial taxes,” he said. “No tax on consumers, no taxes on Canadian industries.”
Last week, newly-sworn in Liberal leader and Prime Minister Mark Carney set the current $80 per tonne consumer carbon charge to zero instead of a scheduled increase in April.
That will remove the entire charge from items like gasoline and natural gas bills, but not on emissions in an adjacent levy aimed at reducing industrial emissions.
In Alberta, that involves the provincial government’s TIER program, which since the mid-2000s has charged a carbon levy and is an equivalent to the federal program. Currently, only Manitoba, P.E.I. and the territories use the federal program.
Last spring, Premier Danielle Smith told reporters that TIER – Technology Innovation and Emission Reduction regulation – is preferable to consumer charges as it drives innovation and investment.
Poilievre claims emerging technology could be depended on to reduce emissions, but some economists say avoiding carbon compliance costs drives such research and development.
The minority Liberal government is expected to call an election this spring, ahead of a planned vote this fall.
“It’s quite flattering how the Liberals have taken what we’ve put out already and tried to rebrand it as their own,” Medicine Hat-Cardston-Warner’s Conservative MP Glen Motz told the News recently.
“The carbon tax will be eliminated. People paying half their utility bill toward it, those days are done if we form government.”
The CPC policy statement comes after years of Conservative campaigning against the consumer carbon tax, while avoiding a clear position on whether the industrial charge would remain.
Over the same time, local critics of the city’s energy division – like the Medicine Hat Utility Ratepayers Association – have said unsettled policy landscape was enough for the city to pause environmental measures, spending and planning. That included the purchase and plan to build portions of the Saamis Solar Park.
Energy committee chair, Coun. Darren Hirsh, has described the strategy as a way to minimize risk and provide options and analysis to maintain the business.
In December, he said when issues evolve, they are reconsidered.
Specifically, the loosening of federal Clean Energy timelines “alleviates some pressure to act right away, (but) no concrete direction has to be taken until we get all the facts,” he said.
Administrators and elected officials have said they already plan to maximize gas-fired generators as long as possible, and work to proceed on solar construction would only move forward based on the long-term economics at the time.
Last month, the city also agreed to transfer work it has completed to develop a regional carbon sequestration hub in the region to Imperial Oil in exchange for costs spent to date.
Province’s TIER levy to ramp up
Under TIER, companies like chemical plants and power stations are charged on emissions over a certain limit based on the historical CO2 production at the specific facility.
However, in order to drive reductions, that benchmark of allowable emissions drops over time while the charge per tonne of CO2 increases, which compounds costs.
In Medicine Hat’s case, the power plant paid about $11 million in TIER levies in 2024, but going forward, it would have to hit steeper reduction targets and be charged a higher rate on that excess CO2.
Left unchecked, the city’s exposure would quadruple over six years, to $42 million annually in 2030, according to a business review presented by KPMG last fall.
