Alberta Carbon Tax May Backfire, Increasing Global Emissions

A recent study by economist Jack Mintz suggests that Alberta's industrial carbon tax could lead to a 'lose-lose' scenario for the province.

The $140 per tonne of emissions tax, included in the Alberta-Ottawa memorandum of understanding (MOU), will increase production costs and make Alberta less attractive to investment than energy-producing US states.

According to Mintz's study, by 2040 the industrial carbon tax, combined with Alberta's business taxes and carbon capture requirements, will raise the cost of oilsands production by 19.6%, conventional oil production by 25.6%, natural gas production by 39.1%, and electricity production by 35.9%.

The tax may encourage some companies to find lower-carbon methods, but investors and companies may instead seek out lower-cost locations with less onerous taxes and regulations. This would offset the environmental benefits of reduced emissions in Alberta, as emissions would rise elsewhere.