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Alberta constructed its own ‘made-in-Alberta’ solution, designed amid two years of a devastating recession triggered by the collapse of oil prices. The Climate Leadership Plan is a plan for economic growth, one that leverages strong climate action for opening market access.

It’s also a plan that will affect Albertans in other ways. If it wasn’t designed right, it could have hurt those at lower income levels, who typically spend a higher proportion of their budgets on transportation, heating and electricity.

One solution would have been to recycle all carbon tax revenue into income tax cuts. That might be attractive in provinces with high income tax rates, but less so in places like Alberta, where taxes are already competitively low.

Also, would this approach have been “fair?” The poorest households don’t typically pay incomes taxes, so they wouldn’t have benefited. That’s why British Columbia, often held up as a pure model of this approach, actually offers a carbon tax rebate to low-income households.

In fact, 60 per cent of households in B.C. end up equal or better off under the combination of carbon tax, income tax cuts and rebates — roughly the same proportion as under Alberta’s program.

An alternative approach would have been to recycle all the revenue. Cheques for everyone! This would certainly be progressive: low-income households would see the highest proportional benefits.

If all households are treated equally, higher-income households see rebates with smaller proportional impacts. But it begs a policy question: if the goal is to reduce carbon emissions, is this the most effective way?