the new conversation on carbon pricing in Alberta | Ecofiscal

Climate “Lovefest” in Calgary? Alberta’s New Carbon Pricing Conversation

Carbon pricing in Alberta - panel discussion "In This Together: Carbon Pricing and Alberta's Family Business" May 22, Calgary
Climate and Energy

Last week, Canada’s Ecofiscal Commission and Suncor co-hosted a panel discussion in the heart of downtown Calgary. The Subject: In This Together—Carbon Pricing and Alberta’s Family Business. What happens when you ask oil and gas executives, business and community leaders, economists, and environmentalists to come together to talk about the future of climate policy in Alberta? The meme “you won’t believe what happened next” comes to mind. The following blog, based around Chris Ragan’s remarks, recaps that fascinating conversation—one that is just getting started.

My name is Chris Ragan, and I am the Chair of Canada’s Ecofiscal Commission. We are a group of policy-minded economists from across the country who come together with the shared conviction that Canada can do better—that we can have better economic performance and better environmental performance – and that these two things go together. You’re going to hear more from me, and more about the Commission, shortly. But I would first like to introduce someone who is very well known in this city – and that is Steve Williams, President and CEO of Suncor. Across this country, many people have been surprised to learn that the CEO of Canada’s largest oil companies is on the Advisory Board of the “ECO”fiscal Commission. Those same people were even more surprised to learn who is on the Board with him. People like Peter Robinson, Sheila Watt-Cloutier, Bob Rae, Mike Harcourt, Paul Martin, Jean Charest and, of course, Preston Manning. But if you know Steve Williams, none of this is really surprising at all. In tackling the serious economic and environmental challenges before us, you could find no better champion of collaboration. From his work with COSIA—enabling the sharing and scaling up of new technologies—to his work with us and other “unusual” allies, Steve and Suncor are critical players in an emerging conversation. One that is not about choosing between our environment and our economy, but rather why we need to choose both.

Keynote: Steve Williams, President & CEO, Suncor Energy

I’m delighted and honoured to have Steve with us today as we dig a little bit deeper into what that discussion means for Alberta’s family business. Please join me in welcoming Steve Williams. Check out Steve’s speech.


And listen to his remarks following the event:

Alberta’s Family Business and Climate Policy

Thank you very much Steve. I’d like to pick up on one of your important points. You quite rightly said that Alberta’s family business is also Canada’s business. And the decisions that Alberta makes in setting its climate policy will influence what happens in the rest of the country – both economically and in terms of our national performance in reducing greenhouse gas emissions.

Here is the interesting complement to that fact. Just about every province in Canada is currently engaged in a discussion like this one. Every province is asking: how do we get the policy right so that we can continue to develop our resources, encourage our core industries, and at the same time make headway on the longer-run low-carbon transition that is both needed and inevitable.

Quebec is having this conversation, and it relates to the development of their “Plan Nord”. Ontario is having it, and it connects to both their manufacturing core and the development of their resource-rich “ring of fire”. British Columbia is talking about it in the context of an emerging LNG sector. Various stages of discussion are taking place in Nova Scotia, Newfoundland, and Manitoba.

How to get climate policy right – and how to get carbon pricing right—is now a nation-wide discussion. But the interesting twist is that this conversation actually sounds different in every province – reflecting their different economic structures and provincial priorities.

Provincial Carbon Pricing

Last month, Canada’s Ecofiscal Commission released its second report called: The Way Forward – and the topic was climate policy. Our conclusion is that the most effective and cost-effective way to reduce greenhouse-gas emissions is to price carbon. And the most practical way to do that in Canada is for policy to be centered in the provinces. One might describe our policy approach as “radically” practical – not because it is truly radical – actually, it’s about as Canadian as it gets – but because so many people think that carbon pricing can only be done sensibly if it is done by the federal government. But I’m sure you would agree that across this country and over the years many good policies have come from the provinces. In Canada, it has long been true that “national” policies need not be “federal” policies. When it comes to climate policy, however, many people seem to forget about the importance of provincial policy action. And this is crucial. Because, the truth is, a federal government of any political stripe would face significant challenges instituting a top-down, one-size-fits-all carbon-pricing policy. Especially if the associated revenues flow out of the provinces. This is a policy space where provinces have the jurisdictional authority to lead, and they already are leading. So let’s build on that momentum and see how far we can go. This brings me back to Alberta. One thing I always like to mention when I talk about this issue in other provinces is the fact that Alberta was actually the first North American jurisdiction to put a price on carbon. That always raises some eyebrows in the crowd. Despite Alberta’s initial lead, however, some other provinces have now caught up, and have even moved quite a bit ahead. Our report shows pretty clearly that Alberta’s policy has a lot of room for improvement.  

Benefits that Albertans will realize with stronger carbon pricing

What will it take for Alberta to move on this issue? That is one of the most common questions I get these days. My answer tends to raise even more eyebrows. My answer to that question is that Alberta will improve its climate policies because Albertans will realize that doing so is in their economic interest. Maybe your eyebrows are raised too, just a little? I give them 3 reasons, the same 3 reasons I’ll pose to you as we gear up for this morning’s panel discussion:

      1. Albertans want action. Like the majority of Canadians across the country, Albertans want to see more policy action on climate change. They share the same concerns for their children’s and grandchildren’s future as other Canadians. And just like people in B.C. and Ontario and Quebec – they do not want to leave those future generations in debt—economically or environmentally.

 

 

    • Success today depends on it. Greater environmental awareness—in Canada and abroad—means higher expectations for environmental stewardship from our resource companies. That is a good thing; it pushes us to be better. But being better means delivering tangible results. Pricing carbon will enable Alberta to demonstrate its commitment to sustainability by lowering its greenhouse gas emissions, starting now. And showing that commitment will help to secure the market access we need for our valuable resources.

 

 

    • Success tomorrow depends on it. Over the next 50-75 years, it is highly likely that the world will transition toward cleaner forms of energy. But we can be equally sure that, during that time, there will continue to be a significant global demand for oil. We don’t know where every barrel will come from, but we do know that it will likely be the sources that are lowest on the global cost curve, and lowest on the carbon intensity curve. Those who want to compete tomorrow will need to start ramping up their innovation today – innovation that will drive down costs and drive down carbon intensity. And nothing is better at driving innovation than the right market signals.

 

    So this is a critical moment for Alberta and for Albertans. The title of this morning’s event is “In this Together” because that is ultimately how Albertans will act – together. And that is why discussions like this one are so important, to Alberta’s future – and to Canada’s.

The Panel Discussion

 

So let’s get that conversation started. I’d like to welcome our panelists:

  • Jim Dinning (also known as the best Premier Alberta never had) – is the chairman of the board of directors of Western Financial Group and former Treasurer of Alberta. And I’m delighted to say that he is also on the Ecofiscal Advisory Board.
  • Amin Asadollahi is the Oilsands Program Director at the Pembina Institute.
  • Judy Fairburn is the Executive Advisor to the Executive Office of Cenovus Energy and also the Board Chair of Alberta Innovates Tech Futures.
  • Justin Smith is the Director of Policy, Research and Government Relations at the Calgary Chamber.

Questions that we asked:

1) What essential change, if any, would you like to see to Alberta’s climate policy? What would be the impact of that change on both industry and consumers?

2) How can we bring more Albertans into this conversation? What concerns, values, and aspirations need to be addressed?

 

What the Audience Had To Say

Last (but not Final) Thoughts on Carbon Pricing in Alberta

This has been a fascinating conversation – and I’m sure we could continue having it all day. But apparently some of you need to go to work. I just want to take a few moments to reflect on what I heard from this discussion. It is clear that there is a strong appetite for building on Alberta’s existing carbon pricing policy. Albertans are ready to move forward – but what does moving forward mean? I think it comes down to four big categories of work:

      • Coverage

 

 

    • Stringency

 

 

    • Transparency

 

 

    • Timing

 

    Coverage: It’s clear that there is an opportunity to significantly broaden the coverage of Alberta’s current policy in order to send the right market signals to all emitters of greenhouse gases – producers and consumers. This is literally what it means to be “In this Together” – lowering Alberta’s emissions needs to be a joint effort – and broader coverage will make it a more cost-effective effort. Stringency: Ultimately, this is about getting real results in terms of emissions reductions. And there are two key components that need to be considered in doing that:

      • Revisiting the intensity standard – should it be raised or done away with all together? The point is we need to apply the price to a much greater share of emissions if we want to drive them down.

 

 

    • A higher carbon price. How high is high enough? An important question. But what likely matters more than where we start is that we ramp up that price slowly but steadily over time.

 

     Transparency: This is particularly significant in terms of the revenue recycling discussion. There are numerous opportunities that government can consider and there are very real fiscal pressures and priorities that may shape those decisions. But no matter what decisions get made, ensuring transparency—showing where that money goes, and how it is benefiting Albertans—will be critical. Timing: This is tricky. If you put yourself in the Rachel Notley’s shoes, there is a significant amount of pressure to address this issue quickly. And it is clear that there is a window for action, and – I think it’s fair to say – a general weariness with what seems like unending delay.

      • But here is where I think people from across the spectrum and with different perspectives can come together and send an important message: Do Not Rush This. Getting it right is simply too important.

 

 

    • That is not permission to drag heals or put off challenging decisions. It should not take years to determine the right policy path. Especially if doing so is a top priority—which I think many agree it should be. But it certainly will take longer than the 38 days we now have before the current policy expires.

 

    Ladies and gentlemen, this is a pivotal moment for Alberta. Conversations like today’s show that the ground is fertile for candid, inclusive, and thoughtful decision-making around what is arguably one of the most critical issues of our time. Alberta has every reason to get this right, and with your open and honest engagement, I have no doubt it will.

Want more? Check out the news coverage related to this event, including Jim Dinning’s podcast and the oped by Steve Williams, Justin Smith, and Chris Ragan.

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