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What Alberta can look for in the federal budget

The federal government is set to unveil its next fiscal plan on Thursday, with a backdrop of economic recovery from COVID-19, high inflation and affordability issues, and a new emissions reduction plan that will put pressure on the oil and gas industry. Here's what might be in the budget for Albertans.

Carbon capture, support for green energy jobs, affordability measures expected in fiscal plan

Deputy Prime Minister Chrystia Freeland with Alberta Premier Jason Kenney. (Craig Ryan/CBC)

Ottawa is set to unveil its next fiscal plan on Thursday, with a backdrop of economic recovery from COVID-19, high inflation and affordability issues, and a new emissions reduction plan that will put pressure on the oil and gas industry. 

The Liberal government's election pledges on housing, climate change and seniors — plus commitments like dental care linked to the confidence and supply deal with the NDP — will likely lead to billions in new spending

It also just unveiled a $9.1-billion emissions reduction plan, which centres heavily on the oil and gas sector. 

Alberta's government is looking for policies that will increase business competitiveness and reduce the cost of living. 

"Alberta's priorities continue to be around productivity, competitiveness and business investment," a statement from Finance Minister Travis Toews's office reads. 

"Canadians already pay a significant amount in federal taxes and are increasingly faced with higher costs of goods and services. We would not support any new federal taxes and are instead looking for some much needed fiscal restraint."

Here are some themes Albertans are likely to see in Budget 2022.

Carbon capture and clean energy

Part of the federal government's plan to hasten emissions reduction is to sweeten tax breaks for fossil fuel companies that use carbon capture, utilization and storage (CCUS) technologies. 

The 2030 emissions plan did not include details on how the CCUS incentive would be structured, but that context is expected in the budget. 

CCUS captures and compresses CO2 for storage underground or to create products like concrete. 

Alberta's government says the CCUS tax credit would need to be at least 50 per cent for it to be effective. The province is looking for any tax credit to be competitive with programs like the 45Q in the United States. Oil and gas companies have previously asked for the credit to cover 75 per cent of project costs. 

Last week, Alberta announced six new proposals to explore developing carbon storage hubs to curb emissions from Edmonton's industrial zones. 

Ottawa's emissions reduction plan is aiming to reduce emissions by 40 to 45 per cent below 2005 levels by 2030. To hit that target, the bulk of the load will rest with the oil and gas sector — which would need to cut emissions by 42 per cent. 

The Oil Sands Pathways to Net Zero alliance, which represents 90 per cent of Canada's total oilsands production, is betting heavily on CCUS. 

The price of oil has been hovering around $100 a barrel, leading to massive profit increases for companies — that are in turn enjoyed by the federal government. 

Trevor Tombe, an economist at the University of Calgary, says Ottawa gets an extra 15 cents for every dollar of additional profit. 

"Given how much we produce, this could be a multi-billion dollar lift for the federal government," he said. 

Tombe says not all the excitement about CCUS can be attributed to an environmental conscience. 

"There are absolutely market forces that are pressing companies to move aggressively to lower emissions because lenders are exposed to risk."

In 2019, the oil and gas sector accounted for 26 per cent of national emissions. 

Jobs in green energy

More details are also expected in the budget on how the government will help set up clean energy jobs alongside its ambitious plan to reduce emissions to net-zero by 2050. 

Federal government insiders told CBC News there will be more investments to create jobs in green technology.

The Business Council of Alberta is looking for the budget to address Alberta's skills mismatch, sustainable economic growth and more details on the energy transition. 

"What we're seeing is this persistent high rate of long-term unemployment," said Mike Holden, the council's chief economist. 

"That points to a bit of a skills gap between the skills that Albertans have presently and those that businesses currently need. And then when we layer on top of that an expected transition toward a lower carbon economy, the skills needs are going to be changing rapidly and significantly." 

The government has already earmarked $2 billion to develop retraining and support programs for workers displaced by the transition to a net-zero economy — commonly referred to as the "Just Transition" plan. The oil and gas industry supports about 500,000 jobs, according to labour market research.

Houses and teeth

Part of the confidence and supply agreement signed by the Liberals and NDP included a commitment to launch a dental care program in exchange for supporting the government until 2025. The housing crisis has also been highlighted as part of that agreement. 

More details related to those commitments are expected in this budget, with federal government sources telling CBC News there will be measures to address the rising cost of living — particularly housing affordability, which is being billed as the main focus of the budget. 

"We expect to see funding for the first stages of dental care coverage and tangible action towards implementing universal pharmacare," said Chris Gallaway, the executive director of Friends of Medicare.

"If implemented, both of these programs will be great news for all Canadians."

Other experts are watching how any new plans for dental care would intersect or clash with existing provincial programs. For example, Alberta covers medical treatments for some low-income individuals or those receiving assistance through programs like the Assured Income for the Severely Handicapped (AISH). 

"How this federal commitment will work with existing programs is more important than the commitment itself," said Lindsay Tedds, an economist at the University of Calgary.

With files from John Paul Tasker and Chris Hall

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