June 25, 2015 / 5:48 PM / 5 years ago

Oil-rich Alberta lifts levy on carbon output, ups target for cuts

CALGARY, Alberta (Reuters) - Oil-rich Alberta will raise the cost of greenhouse-gas emissions for large industrial plants and boost targets for emission cuts as its new government took action on Thursday to strengthen the Canadian province’s environmental reputation.

Alberta is the largest source of U.S. oil imports, but its oil sands are Canada’s fastest-growing source of carbon emissions and the province has faced harsh international criticism for what has been perceived as lax oversight of the oil sands industry.

Environmental groups have used Alberta’s record of rising emissions in their efforts to block TransCanada Corp’s controversial Keystone XL pipeline as well as other projects.

The left-leaning New Democratic Party government said it will boost the cost of excess carbon output to C$20 ($16.26) per tonne at the start of 2016 from the current C$15, and will raise it to C$30 per tonne for 2017. Its target for carbon-emissions cuts will climb to 15 percent of normal emissions in 2016 from 12 percent, rising to 20 percent in 2017.

Environment Minister Shannon Phillips said the new targets will burnish Alberta’s reputation.

“If we get it right, our environmental policy will make us world leaders on this issue instead of giving us a black eye around the world,” Phillips told a news conference.

The Canadian Association of Petroleum Producers (CAPP) said oil sands producers will meet the new targets. But he said they worry that combined with recent tax increases, costs are rising even before the government launches a promised review of oil royalties.

“The revised rules ... and Alberta’s recently announced corporate tax increase have the potential to add almost C$800 million to industry costs over the next two years,” CAPP said in a statement.

The new rules extend Alberta’s current climate-change regime, which was set to expire at month’s end, spurring the government to prolong it to the end of 2017.

Phillips appointed an expert panel to draft new rules on greenhouse gas reductions to take effect after 2017. The panel is expected to release a preliminary proposal ahead of a key United Nations climate change conference in Paris in December.

The new measures were welcomed by environmental groups, which have demanded tougher rules from the province.

“Today’s news sends an important signal both inside and outside Alberta, and is a solid set of first steps,” Dan Woynillowicz, director of policy for Clean Energy Canada, said in a statement.

Editing by Peter Galloway

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