The hydrocarbon industry in Alberta, Canada’s historically most right-leaning province and home of the storied oil sands, has initiated a new round of debate about a new provincial carbon policy. The move is logical for a couple of reasons. The first is the beleaguered Keystone XL pipeline, much desired by Canadian oil companies. Hydrocarbon needs an improved social license to continue to develop the oil sands, and some speculate a stringent carbon pricing system might do the trick. But the new twist is Alberta’s shocking election of leftist Rachel Notley as its premier. This position is equivalent to a state governor in the US, and as Shi-Ling Hsu ably explained, it is as though Texas elected Elizabeth Warren. Yes: A red scare may finally compel the Alberta hydrocarbon production industry to seriously consider carbon tax turkey in an act of self defense.
Canada, and especially Alberta, is navigating some unique politics. Despite its oil-dependent economy, traditionally our neighbor to the north has sought to be a climate action leader in the world of liberal democracies. Canada offered aggressive emissions reductions targets in Kyoto. British Columbia has a famous provincial carbon tax. In 2007, Alberta and Quebec led the world in carbon taxation when they first imposed nominal carbon fees on energy producers. Yet, energy production remains critical to their economy – Canada ranks 8th in the world for refined petroleum product exports. Faced with this dichotomy, it would logically behoove Canada, starting with Alberta, to advocate a climate policy more oriented on carbon taxes than fixed emission reductions.
Oil companies, now seriously discussing a carbon price in Alberta, might soon prevail upon Canadian Prime Minister Stephen Harper to create a national discussion about a Canadian economy-wide carbon tax. Harper has consistently opposed carbon taxes, per se, using the issue to differentiate his Conservatives from his political opposition. But now that the oil and gas industry is using carbon taxes to fend off other more misguided fiscal changes Notley may be considering, Harper may need to change his tune.