April 27, 2017 | Nathan Michaels

Living with the Carbon Tax

Energy panel weighs in on the nuts and bolts of the controversial carbon tax

Alberta's carbon tax is one of the most important policy changes in the province's recent history. How Alberta adapts to the tax will undoubtedly shape its economic landscape for years to come.

In effect since January, the $20-a-tonne tax remains a highly contentious topic from both economic and environmental perspectives. Since its implementation, politicians, businesses, and consumers have worried what the additional tax will do to an already fragile Alberta economy and to Albertans.

Some groups, like the Canadian Taxpayers Federation, for example, claim the average household could pay more than $2,500 per year as a result of direct costs, such as household energy use, and indirect costs from increased costs to business operations.

At recent Calgary Chamber of Commerce luncheon, top executives in the energy sector offered their views of the carbon tax, the effects it has had on their businesses, and their plans going forward.

Held on April 19, the luncheon panel featured: Brian Ferguson, CEO of Cenovus; Scott Thon, CEO of Berkshire Hathaway Energy Canada; Chris Ragan, chair of Canada's Ecofiscal Commission; and, Suzanne West, CEO of Imaginea Energy.

Despite the trepidation felt by many, the executives at the luncheon expressed their favour of the tax and their commitment to reducing emissions.

"It's a well-designed carbon tax," said Ragan, whose organization looks to broaden the discussion of ecofiscal policy reform.

I'm going clean with or without the tax, or with or without incentives, because that's our aspiration.

"The world is going to clean, affordable energy for sure," said West. "I'm going clean with or without the tax, or with or without incentives, because that's our aspiration."

A major fear for many that oppose the tax is its potential negative impact on business. Some argue the carbon tax increases the costs of running a business, which could make Alberta less competitive than other places in Canada and the U.S. In this scenario, some argue it could drive away investment and further damage the economy.

"I think that's a legitimate concern," said Ragan. "If all we do is think about putting a carbon price in place and that's it, then we will drive up costs, that will harm some businesses, and there will be a competitiveness issue."

Ragan does believe, however, that "it's a very well-designed policy" and it mitigates the competitiveness issue effectively with "output based allocations" which come into effect next year, and income tax breaks for small businesses. These two features will help alleviate the burden of the tax on the consumer as well.

As we go forward, we'll make sure that we bring renewables on in a pace that makes sense from a cost point of view.

Thon offered a similar sentiment. "The carbon tax will give us an incentive to do certain things," he said. "We really just need to make sure our costs coming out of whatever we produce ... remain competitive for our consumers."

Moving forward, the executives expressed their commitment to reducing emissions economically.

"As we go forward, we'll make sure that we bring renewables on in a pace that makes sense from a cost point of view," said Thon.

West emphasized the necessity to use what we already have in place to transition to renewables quickly and economically. She added that the cost of replacing all energy supplied by fossil fuels with renewables instantaneously would be "astronomical."

"Change the product that we're producing to a clean hydrocarbon and use this to get to the same place, I will suggest faster and more economically," she said. "Why wouldn't we do that?"

It's still too early to tell what impact the tax is having today, but the executives made the case that reducing emissions can be done economically.

"It's too soon to be expecting big changes," said Ragan. "It's about gradually driving emissions reductions over the next thirty years or more."

Tagged: Calgary Chamber of Commerce | Canadian Taxpayers Federation | carbon tax | Economy