Alberta’s Prentice Seeks to Avoid Carbon-Tax Rise Amid Oil Drop

The premier of Alberta, a province that relies on crude revenue to help fund public services, wants to defer raising a levy on greenhouse gas emissions until other oil-producing jurisdictions introduce their own carbon taxes.

Alberta currently requires companies that emit more than 100,000 metric tons of greenhouse gases a year to cut emissions by 12 percent or pay a penalty of C$15 ($12) a ton. Premier Jim Prentice has said the province is looking for more revenue, and has ruled out raising corporate taxes or royalty rates.

Although the province is also considering whether to extend, or even increase, its carbon levy, Prentice suggested Friday he wasn’t in a rush to expand the tax other oil producers don’t impose at all.

“I believe in conservation but I don’t believe in damaging our industrial competitiveness,” Prentice said Friday in an interview at Bloomberg’s New York headquarters. Regarding the current carbon regime, “some people would say it’s weak, but most people would also point out no one else has a policy at all, at least no one in the energy business. So this is a balance.”

Alberta had pledged to unveil the fate of its Greenhouse Gas Reduction Program by the end of 2014. Prentice said as recently as November options included increasing the carbon price gradually and continuing to expand the scope of emissions it’s applied to.

The premier said he’s “not suggesting that we cut” the tax, and no decision has yet been made on whether to expand or extend it. His government is preparing a budget in response to the oil-price plunge that has thrown the province’s fiscal projections into disarray.

‘Doubling Down’

Under Alberta’s program, proceeds from the carbon tax are channeled into a Climate Change and Emissions Management Fund, which has collected C$503 million since 2007.

Before Alberta starts “doubling down” on expanding the fund, “I want to see some progress from other people we compete with,” Prentice said, adding a North American emissions-reduction strategy would be the best way to do that.

Alberta, home to about 12 percent of Canada’s population, produces 36 percent of its greenhouse gas emissions, according to a federal government report, which projects Alberta’s share of emissions will increase to 39 percent by 2020.

The landlocked province, which sits on the world’s third-largest pool of crude reserves, has faced questions about emissions and its environmental record while pushing for approval of major pipeline projects such as TransCanada Corp.’s Keystone XL. Company executives have said new conduits are necessary to get their increasing oil production to market and avoid costly bottlenecks.

‘Improve Policies’

“I wouldn’t expect the United States to damage its competitiveness” relative to Canada, Prentice said. “We’ll improve our policies but we’ll do it in a way that maintains our competitiveness.”

Prentice, 58, is a former federal cabinet minister and ex-bank executive who became premier last fall. He said Friday he doubts whether taxing carbon emissions will reduce them.

“I don’t know at the end of the day that it reduces emissions,” he said.

The drop in oil revenue has led Alberta to look at cutting spending and raising revenue from other sources. Prentice has said the province can no longer rely on non-renewable energy windfalls to help pay for public services.

He ruled out increases to the corporate-tax or energy-royalty rates, while leaving the door open to increases in personal income taxes.

“The energy companies are in the same environment we are,” he said. “It’s the wrong time to start taxing investment, jobs and wealth. It’s just the wrong thing to do at this point, and so I won’t be part of it.”

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