Climate Change Emission Levies
NOW THEREFORE BE IT RESOLVED THAT the Alberta Urban Municipalities Association urge the provincial government to delay the increase of the carbon levy for large industrial emitters until 2020 so that the province can maintain a reliable electricity baseload until such time as new replacement generation comes online;
AND FURTHER BE IT RESOLVED THAT the Alberta Urban Municipalities Association urge the provincial government to consider carbon-revenue neutrality for municipalities in regards to the major fuels carbon levy;
AND FURTHER BE IT RESOLVED THAT the Alberta Urban Municipalities Association urge the provincial government to provide new, comparable jobs to communities where jobs are lost as a result the closure of the coal plants.
WHEREAS the Provincial Government in 2016 implemented the climate leadership strategy that stated that facilities that contribute to Alberta’s Climate Change and Emissions Management Fund that pay $20 for every tonne over their reduction target will have to pay $30 per tonne as of Jan 1, 2017;
WHEREAS coal powered electricity generation may become uneconomical after Jan 1 2017, causing coal plants to close prematurely;
WHEREAS implementing the increase in the carbon emissions levy has caused the return of power purchase arrangements back to the Balancing Pool;
WHEREAS the closure of coal fired generating stations before securing a reliable replacement will result in increased, and potentially volatile energy costs to municipalities without compensation from the Government of Alberta;
WHEREAS the Federal Government, in 2012, implemented Legislation that Coal-Fired Generating Stations would be decommissioned after 50 years of service;
WHEREAS industry in Alberta consumes more than 50% of all of the generation. Maintaining a stable base load of power secures confidence for industry to invest in Alberta in the future.
In 2012 the Federal Government legislated that coal-fired generating stations would close after their 50-year use. Of the 18 coal-fired generating stations in Alberta, 12 would be closed prior to 2030, leaving only six to remain operating after that date. In November 2015, the Alberta Government introduced their climate change strategy which would cease the operation of all coal-fired generating stations by 2030. This includes a carbon emissions levy which would increase the per tonne levy from $15 to $20 in 2017 and increasing again in 2018 to $30. These increases affect the coal-fired generators more substantially as they will be paying these levies on a larger amount of emissions. As a direct result of the increase in the carbon emission levy, there have been Power Purchase Arrangements returned to the Balancing Pool as the arrangements have become unprofitable. The return of the Power Purchase Arrangements could close these generating stations much earlier than the 2030 date, causing Alberta's base load of power to be depleted, which would increase the cost of power not only to residential consumers but also to industry and municipalities. Sheerness Generating Station was involved in one of the Power Purchase Arrangements returned, and is one of the six coal fired generating stations originally scheduled to operate past the 2030 date. The federal legislated closure for Sheerness is 2034 for unit 1 and 2040 for unit 2. Presently there is not a mechanism to compensate municipalities for the increased costs associated with the carbon emissions levy, downloading more costs to municipalities to fund. Therefore, amending the carbon emissions levy to allow our base load of power to be secure will benefit all Albertans and the municipalities in which they live, while still encouraging industry to invest in Alberta as a result of low energy prices.
AUMA has received correspondence from Alberta Environment and Parks, Alberta Energy, and Alberta Economic Development Trade on matters related to this resolution.
Minister of Environment and Parks:
The Ministry is eager to learn from AUMA’s expertise on opportunities for carbon levy support and greenhouse and greenhouse gas reduction initiatives within municipalities. (To see the full letter, click here.)
Minister of Energy:
If new technology is developed to produce zero pollution from coal, it could be considered once again as a feasible option for electricity generation. The province is committed to a transition that will help ensure consumers and taxpayers are protected, communities and workers are supported, and companies and investors are treated fairly. (To see the full letter, click here.)
Minister of Economic Development and Trade
The province is taking the following steps:
- Working with the federal government to secure an exception to federal regulations that would allow coal-fired plants to stay open past their federally mandated shut down, by converting to other forms of generation such as natural gas.
- Implementing agreements with TransAlta, Capital Power and ATCO that gives them the option to convert their plants to natural gas, and require them to fulfill obligations to staff and local communities,
- Convening advisory panel on coal communities to consult with economic development organizations, workers, labour, and local leaders about the community impact of the coal phase-out and how to best support the communities through the transition. The panel’s findings will be released in the coming months and reviewed with local leaders to develop a made-in-Alberta plan for the communities.
(To see the full letter, click here.)
AUMA considers government response.