How carbon pricing will work, province by province

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The federal government has ordered all provinces and territories to put a price on carbon emissions by 2019 – but some provinces are years ahead of the game.

Quebec, Alberta and B.C. have had carbon taxes or cap-and-trade programs in effect since long before it became a federal priority.

Three of the other seven provinces have developed systems which meet the federal government’s criteria and will take effect next year.

The feds are imposing carbon pricing plans on the remaining four provinces, either because their self-developed systems weren’t considered aggressive enough or because they opposed carbon pricing entirely.

According to the federal government, more than 70 per cent of households will receive more money in rebates than they will spend on carbon pricing under the federal plan.

Here is a look at how carbon pricing will work in each province and territory. Most of the numbers below will increase significantly by 2022, when the federal price on carbon hits $50 per excess tonne.

British Columbia

B.C.’s existing carbon tax, which has been in place since 2008, meets the federal standard.

The B.C. tax is levied on the purchase and use of fossil fuels. It covers about 70 per cent of all greenhouse gas emissions in the province.

The tax rate was raised to $35 per excess tonne of carbon dioxide-equivalent emissions earlier this year, and will hit $50 per tonne by 2021. Gasoline is taxed at a rate of 7.78 cents per litre.

B.C. residents receive a climate tax credit of $135 per adult and $40 per child.

According to provincial officials, B.C.’s net emissions fell by 4.7 per cent between 2007 and 2015, while the province’s real GDP increased by more than 17 per cent.

Alberta

Like B.C., Alberta was ahead of the federal government in implementing a carbon tax.

Alberta first put carbon pricing into place in 2007, and expanded the program to include a tax on fuel in 2017.

Alberta’s tax on emissions rose to $30 per tonne this year, while the gasoline tax rate rose from 4.49 cents per litre to 6.73 cents per litre.

The province estimates that its carbon tax directly costs the average couple with two children a total of $508 per year. Families earning less than $95,000 per year receive a $540 rebate, with partial rebates available to some households above that income level.

Saskatchewan

Saskatchewan is one of four provinces not to have developed a carbon-pricing plan that meets the federal requirements.

The province’s government unveiled a system in August which the federal government says would “partially meet” its standard.

Under Saskatchewan’s plan, large industrial facilities which emit at least 25,000 tonnes of carbon dioxide-equivalent gases per year will have to reduce their emissions by 10 per cent by 2030. This will cover approximately 1.1 per cent of the province’s total greenhouse gas emissions.

The federal government announced Tuesday that it will add a carbon pricing system for other industrial users, as well as a tax on fossil fuels. For gasoline, the tax will be set at 4.42 cents per litre for 2019.

According to the federal government, the average Saskatchewan household will pay $403 in carbon-related costs in 2019. The tax will be accompanied by rebates, which the government says will see the average household receiving $598 next year.

Premier Scott Moe says Saskatchewan will continue a court challenge against the federal system, arguing that the imposition of a carbon tax on provincial utility companies is unconstitutional. The case will be heard by an appeal court next spring.

Manitoba

Manitoba has also fought against pricing carbon. Premier Brian Pallister’s government recently proposed a plan which would include a pricing system for large industrial emitters and a flat $25 levy for citizens, but backtracked on it earlier this month.

Under a plan imposed on the province by the federal government, industrial facilities emitting more than 50,000 tonnes of carbon dioxide-equivalent per year will be taxed starting next January. Companies emitting between 10,000 and 50,000 tonnes will be able to opt into the system as well.

Fossil fuels will also be part of the plan, with gasoline being taxed to the tune of 4.42 cents per litre.

According to the federal government, the average household in Manitoba will receive a rebate of $336 in 2019 while paying $232 in carbon-related costs.

Pallister says the federal plan amounts to nothing more than “taking money and giving it back.”

Ontario

Until recently, Ontario had been operating a cap-and-trade system which allowed businesses to purchase carbon credits to offset their emissions.

The province had raised nearly $2.9 billion through carbon credit auctions, and planned to return that money to the public in the form of rebates for environmentally friendly home renovations.

The cap-and-trade system was scrapped over the summer as the government of Premier Doug Ford took office. Ford’s government has not introduced an alternative carbon pricing mechanism, instead leading the constitutional challenge to the federal program.

With no other plan in place, the federal government announced Tuesday that it will put in place a plan similar to the ones it is imposing in Manitoba and Saskatchewan, with a carbon tax for large industrial emitters and an initial gasoline tax of 4.42 cents per litre.

The feds say their plan will cost the average Ontario household $244 in 2019 and be accompanied by an average household rebate of $300.

Quebec

Quebec’s existing cap-and-trade program meets the requirements of the federal government.

Industrial, electricity and fossil fuel companies which emit more than 25,000 tonnes of carbon dioxide-equivalent chemicals must take part in the cap-and-trade market. Companies see slight annual reductions in their cap-and-trade allowances, which pushes the province as a whole toward its emissions reduction targets.

Revenues from the system are put toward various measures to help the province reduce carbon emissions and adapt to climate change.

Quebec’s cap-and-trade system came into effect in 2013. The province aims to have its total emissions 20 per cent below where they were in 1990 by 2020, and 37.5 per cent below the 1990 level by 2030.

New Brunswick

The fourth province not to develop a carbon pricing scheme which meets the federal requirements, New Brunswick will instead be subjected to the federal system.

Like in Ontario, Manitoba and Saskatchewan, New Brunswick will see industrial polluters start paying into the system next January and taxes on fossil fuels take effect next April. Gasoline will see a new tax of 4.42 cents per litre.

According to the federal government, the average household in New Brunswick will pay $202 in carbon-related costs in 2019 and receive a rebate of $248.

The province’s Liberal government, which may or may not retain its hold on power after last month’s election left no party with the majority of seats in the legislature, has opposed a new carbon tax.

Progressive Conservative leader Blaine Higgs, who could become premier, said Tuesday that his party is against “any carbon tax of any kind.”

Prince Edward Island

Large industrial emitters in P.E.I. will be subject to the same carbon pricing policy imposed by the federal government in four other provinces, but a two-year agreement with the federal government allows for a different solution on fossil fuels.

The province said Tuesday that it had entered into an agreement with the feds on a plan that would meet P.E.I.’s emissions reduction targets.

The plan involves a four-cents-per-litre surcharge on gasoline and diesel, which the provincial government says it is not in favour of and will offset by reducing its existing gas tax.

Unlike in most other provinces, home heating fuels in P.E.I. will not be subjected to any new taxes.

Nova Scotia

Nova Scotia will be implementing a cap-and-trade program as of Jan. 1, 2019.

Companies will be given allowances to emit carbon dioxide-equivalents to a certain level, and will be able to buy and sell credits to pollute above that level.

Each year, the total number of allowances in the province will decrease to help push Nova Scotia toward its overall emissions reduction goals.

The province estimates that the program will add about one cent per litre to the price of gasoline and about one per cent to electricity rates.

Newfoundland and Labrador

The government of Newfoundland and Labrador released details of its carbon pricing plan on Tuesday. The plan has the approval of the federal government.

Under the plan, gasoline will be taxed at 4.42 cents per litre, instead of the existing carbon tax on gasoline of four cents per litre. Diesel fuel will also be taxed, but home heating fuels will not.

Industrial polluters in Newfoundland and Labrador will be subjected to annual reduction targets, with exemptions for businesses in agriculture, fishing, forestry, mineral exploration and other industries.

The carbon tax is expected to apply to businesses responsible for 43 per cent of all carbon dioxide-equivalent emissions in the province.

Yukon

The Yukon government has asked the federal government to apply the same plan in its territory as is being imposed on provinces that have not developed their own plans.

There are some slight differences in how the plan is applied in Yukon. It will not take effect until July 2019, and will not include a carbon-related tax on aviation gasoline or aviation turbo fuel. There will also be fuel charge relief for diesel-fired electricity generation in remote communities.

Neither the federal nor provincial government has released estimates of how the Yukon plan will affect the average family in the territory financially.

Northwest Territories

Carbon pricing in the Northwest Territories will largely follow the same path as in Yukon, with a 2019 benchmark price of $20 per tonne increasing annually until it hits $50 per tonne.

Territory officials say aviation fuel will not be taxed under the plan, and all costs related to home heating will be fully rebated. Additionally, Northwest Territories residents will be given cost-of-living rebates which will rise to $260 per year per adult and $300 per year per child.

The territory’s carbon tax on gasoline will start at 4.7 cents per litre.

Nunavut

Like Yukon, Nunavut is supportive of the federal government applying its own carbon pricing framework in its territory.

Large emitters and most fossil fuels will be subject to carbon taxes as of July 2019, with exemptions for aviation fuels and diesel-powered electricity generation.

With files and reports from CTVNews.ca’s Rachel Aiello, CTV Regina’s Katherine Hill, CTV Winnipeg’s Jeff Keele and The Canadian Press