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The federal government's carbon pricing plan will eliminate Alberta's hard-earned climate gains

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Back in October, Justin Wheler, Executive Director of Regulatory and Compliance at Alberta Climate Change, told a symposium at the University of Alberta that if year to date trends hold, greenhouse gas (GHG) emissions from electricity generation in the province are expected to decline by a net eight megatonnes for this calendar year. To put this in perspective, that is a three per cent reduction for the province, and an incredible one per cent for the entire nation – from one pricing policy, in one industry, in one province.

Shortly thereafter, the federal government announced its new pricing policy for the electricity sector, a backstop measure for those jurisdictions that do not adopt their own policy. The feds propose to use a complex economic device for large industries called an output based pricing system (OBPS), which is designed for emissions-intensive, trade-exposed industries.

The policy, well explained by Canada's Ecofiscal Commission, means that emitters pay the full carbon price on their emissions, but then get a rebate back on emissions below a certain threshold, generally the average or best in class for the industry.

This has been shown to be equally effective as a flat carbon price as far as incenting reductions, while it also does not penalize emitters........