The Climate Leadership Plan is a made-in-Alberta emissions reduction strategy designed to meet the specific needs of our unique economy.
A number of economic benefits will flow from the plan. The economy-wide price on carbon funds initiatives that will diversify our economy and create new jobs in infrastructure, energy services and renewable energy.
Other economic benefits of carbon-pricing include improved social and health outcomes, better cost certainty to businesses from an established carbon price schedule and the development of innovative new technologies.
The Climate Leadership Plan was directly responsible for the federal approval of two new energy infrastructure projects – Trans Mountain Expansion (TMX) and Enbridge Line 3 – that are critically important to Alberta’s economy.
TMX provides access to Canadian tidewater, allowing Alberta’s oil sands industry to sell its energy products at better prices to new markets.
Additional pipeline capacity brought by TMX and Line 3 is expected to lift Alberta’s GDP by 1.5%–2.0% by 2023.
Effect on Gross Domestic Product (GDP)
Based on economic modelling of the Climate Leadership Plan, Alberta’s real GDP is expected to grow at a slightly reduced pace compared to a 'business as usual' scenario.
But the GDP benefits of improved market access for Alberta energy products will offset any slowing of GDP growth created by the carbon price.
The impact of the Climate Leadership Plan on real GDP is expected to be 0.75% by 2024. This means the average annual economic growth rate is estimated to be reduced by about 0.1 percentage points per year over the next 6 years.
This will be more than offset by an expected economic uplift of more than 1.5%, due to the enhanced market access enabled by the Climate Leadership Plan.
Federal carbon price
The above estimates do not factor in the benefits of avoiding carbon pricing policies imposed on Alberta by the federal government.
Provinces that do not have an economy-wide carbon price in place by the end of 2018 will be subject to a federally imposed carbon-pricing program on January 1, 2019.
The federal government has indicated that the price on carbon must be $20/tonne of carbon dioxide emissions in 2019 and rise $10/tonne each year until it reached $50/tonne in 2022.
Relative to a 'business as usual' scenario under federal carbon-pricing, Alberta's Climate Leadership Plan design is expected to generate a net economic benefit by 2022.