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. Every dollar raised by the economy-wide price on carbon will be reinvested in the province, helping to diversify our economy and create new jobs in infrastructure, energy service 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 is directly responsible for 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 tidewater, allowing Alberta’s oil sands industry to sell its energy products at better prices to new markets. This project alone is projected to lift Alberta’s GDP by about 1% by 2022.
Effect on GDP
Based on preliminary economic modelling of announced climate policies, 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 real GDP impact is expected to be 0.3 to 0.4% by 2022, which means growth is estimated to be slower by about 0.05% per year over the next six years. This assessment is preliminary, with many details of carbon price reinvestment, levy regulations, and large emitters’ output-based allocations still under development.
Federal carbon price
The above estimates do not factor in the benefits of avoiding carbon pricing policies imposed on Alberta. The federal government has announced its intention to require all provinces to implement an economy-wide carbon price of $50/tonne by 2022, recognizing provincial pricing policies already in place. 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.