By Chester Dawson 

CALGARY, Alberta--The government of oil-rich Alberta province in western Canada on Sunday pledged to phase out coal emissions by 2030, limit greenhouse gases from oil-sands production and implement an economywide carbon tax.

The province unveiled the long-awaited plan one day ahead of a meeting in Ottawa among Prime Minister Justin Trudeau, Alberta Premier Rachel Notley, and the leaders of other Canadian provinces and territories to discuss environment policy. Mr. Trudeau has pledged to develop a framework for reducing greenhouse-gas emissions before a United Nations summit on Nov. 30.

The plan comes at a challenging time for coal and oil producers in western Canada that are struggling to cope with low commodity prices.

"Our goal is to become one of the world's most progressive and forward-looking energy producers," Ms. Notley said at a news conference in Edmonton. "We are turning the page on the mistaken policies of the past."

The premier described President Barack Obama's rejection of the Keystone XL pipeline earlier this month as a "kick in the teeth" and a wake up call for Canada to improve the province's environmental reputation. Mr. Obama cited Alberta's "dirtier crude oil" in his decision not to approve the project, which is designed to carry oil-sands crude from Alberta to the U.S. Gulf Coast.

Flanked by oil industry executives and representatives from Native American and environmental groups, Ms. Notley said the new levies would be "revenue neutral" to offset other taxes, and that some funds will be set aside to research energy technologies.

Ms. Notley's left-leaning government swept into power in May, ousting a right-of-center party that ruled the province for four decades and had played down the urgency of policies to address global climate change. Weeks later, Alberta said it would double its existing carbon tax on large-scale industrial emitters to 30 Canadian dollars ($22.50) per metric ton by 2017.

That tax will be extended across the province's economy by instituting levies on sales of gasoline and on household utility bills. Alberta also will end coal-fired generation of electricity and mandate that renewable forms of energy account for 30% of electrical production by 2030. Coal currently accounts for about 38% of Alberta's electrical generation capacity, with natural gas making up 44% of the total. The remainder comes from renewables such as hydroelectric generation, biomass and wind.

Coal producers criticized the new policy, saying it will raise electricity costs in Alberta and cost Canadian jobs. "It's going to take a lot of money out of the economy," said Robin Campbell, president of the Edmonton-based Coal Association of Canada, an industry trade group. "It was premature to do this before we see what other countries of the world will pledge to do" at the Paris summit on climate change, he said.

But Canada's leading oil and gas lobby, the Canadian Association of Petroleum Producers, said it supported the provincial government's initiative, noting it could help improve Alberta's image in markets where oil-sands producers hope to expand access. The group also said the phase out of coal-fired power would likely boost the use of natural gas to generate electricity.

The government also said it would enact a limit on total oil-sands emissions of greenhouse gases of 100 million metric tons.

Alberta's oil sands are one of the most emissions-intensive forms of crude extraction. Oil-sands wells require steam injections to leach out crude embedded in sand, a process that burns up to 1,000 cubic feet of natural gas to produce a single barrel of oil. Canada's government estimates that oil sands-related emissions will nearly double to 103 million metric tons by 2020.

Oil and gas producers in Alberta had expressed concerns about the rapid policy shift in recent weeks. But four of the biggest oil sands producers, including Suncor Energy Ltd., Canadian Natural Resources Ltd., Cenovus Energy Inc. and the Canadian unit of Royal Dutch Shell PLC, on Sunday said they backed the new initiative, noting it would accelerate clean- energy technology investment.

"This plan recognizes a need for a balance between the environment and the economy," Murray Edwards, chairman of Canadian Natural Resources, said at the news conference. "We will do our part to address climate change while protecting jobs and industry competitiveness," he said, speaking on behalf of the province's top oil-sands producers.

Production from the oil sands has been growing at a steady clip in recent years, making the industry one of the fastest-growing contributors to rising Canadian carbon emissions. Canada's environment ministry says the country's CO2 emissions have risen over the past five years and are expected to hit 781 million metric tons a year by 2020 if no reduction measures are taken.

"Meaningful action in Alberta was long overdue," Alberta's environment minister, Shannon Philips, said at the news conference. She called climate change "the single greatest threat to our health and out economy."

Write to Chester Dawson at chester.dawson@wsj.com

 

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(END) Dow Jones Newswires

November 22, 2015 19:19 ET (00:19 GMT)

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