Manitoba Tories unveil cap-and-trade plan By: Larry Kusch and Jessica Botelho-Urbanski Posted: 12:17 PM CDT Monday, Jul. 30, 2018

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Manitoba’s Progressive Conservative government is devising a form of cap-and-trade system for reducing carbon emissions from large emitters.

Sustainable Development Minister Rochelle Squires released a discussion paper Monday for a plan, she says, is tailored to Manitoba’s “unique emissions profile and environmental and economic goals.”

Facilities will be assigned specific emissions targets — and pay a carbon price of $25 per tonne on emissions exceeding these levels. Companies will be able to bank credits if they more than meet their compliance obligation, or trade them to entities who exceed their allowable emission limits.

The output-based pricing system will apply to industrial facilities with annual emissions of 50,000 tonnes or more of carbon dioxide equivalent. It will not apply to municipalities, universities, hospitals, schools, landfills, waste-water treatment facilities or natural gas distribution networks, Squires said.

There are six companies in Manitoba whose annual emissions exceed the 50,000 tonne threshold: Koch Fertilizer Canada, TransCanada Pipelines, Graymont, Canadian Kraft Papers, Husky Oil, and Vale.

In January 2020, smaller emitters — in the 10,000 tonnes to 50,000 tonnes — will be able to opt into the system provided they are facing competitive pressures due to the carbon tax.

Squires said the government will be working with large industrial emitters “to make sure they have a path forward for lowering their carbon footprint.” The discussion paper proposes reducing the emission threshold for imposing the carbon tax by two per cent per year.

Squires said she expects buy-in from large industrial plants.

“They are going to look at this as an opportunity to start to reduce their emissions profile,” she said at a media briefing Monday. “Many of them have already begun the work, and we’re going to be moving hand-in-hand with them as we move forward to ensuring that they achieve their goals to (reduce) carbon emissions and pay less carbon price.”

Dave Holmes, plant manager at Graymont’s lime-producing plan in Faulkner, said employees are worried about how carbon emission pricing might affect their business. But he said they prefer Manitoba’s plan to the federal government’s.

Canada insisted a carbon price should start at $10 per tonne in 2018, rising by $10 per year to a final $50 per tonne in 2022. Manitoba balked, initiating its own fee — a flat $25 per tonne — starting in January 2019.

“Compared to the federal plan, I’m pleased with (Manitoba’s) – that they’re going out on their own… the alternative would be so detrimental to us,” Holmes said.

He noted Graymont is already looking at ways to limit its carbon output.

Holmes would not say whether Graymont, a multi-national company, would consider pulling out of Manitoba or Canada if carbon pricing became too expensive. He pointed to difficulties competing with American companies that aren’t forced to pay carbon taxes.

“Here’s the big issue, it’s really the fact that by the United States not having any carbon tax at all and lower costs in taxes in industry, that’s our competitive market. So it has a huge impact on Canada, imposing this carbon tax and not realizing that in a market that’s very tight, imposing this on us puts us at a disadvantage compared to our American companies,” Holmes said. “If carbon tax was universal across the globe, we wouldn’t be having an issue with it.”

Curt Hull, project manager of the Climate Change Connection program at Manitoba Eco-Network, said he likes Manitoba’s framework for large-scale emitters. However, he’s conscious those top six companies only represent a small fraction of the province’s total emissions output (about six per cent).

Hull said his biggest concern is what benchmarks the province will use for large-scale emitters. The emissions-intensity performance standards will be established by June 2019, according to government.

“If the cap is too loose to start off with, well it’s not going to provide the emissions reductions that we need,” he said.

The province is also looking to minimize “risk of carbon and investment leakage,” it states in its discussion paper. Hull said that principle ought to be top of mind when negotiating with such big businesses, who often provide much of the jobs available to rural Manitobans.

“Capital investment is fluid… and the last thing you want is to put something in place that results in a business taking their emissions and not reducing them, but just moving them someplace else,” he said. “The atmosphere is all connected. So, ultimately, we just want to be able to work with the players in such a way that we actually reduce the emissions, which is a tricky business.”

NDP MLA Rob Altemeyer accused the PCs of “letting the largest emitters off the hook completely,” while offering no new programs to help Manitobans withstand the impact of the upcoming carbon tax.

The province plans to start collecting the the carbon tax on Dec. 1. The tax will add just over a nickel to the cost of a litre of gasoline. It will also be applied to diesel fuel, natural gas and propane. Manitoba is expecting to collect $248 million annually from the tax.

Altemeyer said the NDP used procedural tactics in the legislature earlier this year to delay implementation of the tax because the government offered no plan for families and businesses to transition to affordable green practices.

Liberal Leader Dougald Lamont said he’s concerned the bulk of carbon tax revenues will be collected from individuals and small business.

He said the agriculture industry (tractor and combine fuels) is largely exempt from paying the tax, but there doesn’t seem to be a plan in place for reducing emissions in agriculture.

Similarly, Lamont said, the trucking industry is facing higher costs due to the tax, but government doesn’t appear to have a plan for helping it make the investments it needs to lower emissions.

The government has said carbon tax revenues will be offset by reductions in provincial income tax rates and a future percentage point decrease in the retail sales tax.

larry.kusch@freepress.mb.ca

jessica.botelho@freepress.mb.ca

Larry Kusch
Legislature reporter

Larry Kusch didn’t know what he wanted to do with his life until he attended a high school newspaper editor’s workshop in Regina in the summer of 1969 and listened to a university student speak glowingly about the journalism program at Carleton University in Ottawa.

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