As Oil and Gas Revenues Drop by 90 Per Cent, Alberta Budget Paves Way For Clean Energy Sector to Emerge

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A renewable energy economy may emerge from the heart of Canadaโ€™s oil industry thanks to announcements made in Albertaโ€™s provincial budget last week. The budget promises spending $51.5 billion in 2016 despite resource royalties projected to be as low as $1.4 billion, representing a 90 per cent drop.
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The province pledged $2.2 billion for clean infrastructure, $645 million for energy efficiency and unveiled an expanded carbon levy that the government estimates will generate $3.4 billion for renewable energy development. An additional $195 million has been set aside to help First Nations communities transition off coal and onto cleaner sources of energy.
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โ€œWeโ€™re very proud of our climate leadership plan as a progressive way to bend the curve on carbon,โ€ Finance Minister Joe Ceci said in a press conference Thursday.
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Sara Hastings-Simon, director of the clean economy program at the Pembina Institute, commended the provinceโ€™s decision to expand the carbon levy to beyond industrial emitters.
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โ€œWe know it is the most efficient way to reduce emissions in the province,โ€ sheย said.

Although Alberta was the first jurisdiction in North America to implement a carbon tax, the levy applied only to emitters producing more than 100,000 tonnes of greenhouse gas emissions. New changes to the โ€œpolluter paysโ€ legislation means the levy will now be economy-wide and set to scale up from $15 to $30 per tonne by 2018.ย 

The government forecasts the scaled-up tax will generate $9.6 billion in gross revenue over five years.
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Hastings-Simon said the new legislation โ€” which taxes all consumers at the same rate as industry โ€” includes a rebate option for small consumers and lower income Albertans.
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โ€œAt the end of the day 60 per cent of Albertans are not going to owe anything under the system,โ€ Hastings-Simon said, adding the program is likely help the province work towards its climate targets.
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โ€œWith a flat rebate youโ€™re incentivizing folks to reduce emissions further as they end up with more money in their pockets as they reduce emissions.โ€
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The province will also start up a new agency, Energy Efficiency Alberta, that will help homeowners reduce emissions in their households.
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On Thursday Minister Ceci announced the $3.4 billion generated from the carbon levy would be dedicated to clean energy projects through a bidding system adjudicated by the Alberta Electric System Operator. Bidding will start at the end of the year.ย 
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โ€œBy combining private sector incentives, the market guides you to where you should be investing government money,โ€ Hastings-Simon said.
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Greenpeace Canada climate and energy campaigner Mike Hudema said the new tranche of funds could definitely help jumpstart the provinceโ€™s renewable energy sector.
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โ€œAlberta is finally going to take advantage of the tremendous renewable energy potential that it has,โ€ he said.
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He added the government should ensure money is also available to community-based projects. Structural change, to address the way energy is owned in the province, should also part of this new system, he said.
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โ€œWe need to see a prioritization on municipal, farmer association and First Nation ownership so that the benefits are flowing into our communities rather than out of them,โ€ Hudema said.
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The government did set aside $195 million specifically for First Nationsโ€™ energy transition, but there has been no indication of how that money will role out.
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Jesse Cardinal of Keepers of the Athabasca said she hopes that however those funds are delivered, the process be done in consultation with First Nations.
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โ€œConsultation is making a plan together, so I would hope thatโ€™s how Alberta is going to go with that $195 million,โ€ Cardinal said. โ€œDifferent First Nations have different ideas of how they want to move away from coal.โ€
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Cardinal was instrumental in establishing a solar program the Fort Chipewyan First Nation now operates. In 2014, securing funding for the $14,000 project was not easy, she said.
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Now two more First Nations, the Beaver Lake Cree First Nation and Fort McMurray First Nation, are looking to implement their own solar projects.
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The governmentโ€™s current funding outline includes specific solar project targets and Cardinal hopes the road will be easier for First Nations going forward.
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โ€œThatโ€™s the next step we need to take is to ensure dollars are available for everybody,โ€ she said. โ€œThis is one step of many steps, the beginning of a long road ahead of how we need to change.โ€

Image: Premier Rachel Notley and Finance Minister Joe Ceci host a pre-budget town hall in Fort McMurray, the home of the Alberta oilsands. Province of Alberta/Flickr.

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