On January 15 2018, the Canadian Federal Government laid out the details of it plan to implement a  $50/tonne carbon tax in proposed legislation named the “Greenhouse Gas Pollution Pricing Act”.  The highlights are:

  • The Federal Tax will only apply in Provinces and Territories that do not have a comparable carbon tax already in place
    • That means, as of today, it will apply only to 20% of the Canadian population
    • Specifically those in Saskatchewan, most Atlantic provinces, NWT, Nunavut, Yukon will be subject to the Canadian Federal carbon levy
    • Newfoundland & Labrador and others are expected to announce their own carbon tax systems in the spring of 2018
  • The tax will start at $10/tonne in 2018 and will be at $50/tonne by the end of 2022
  • There are two parts to the system, a consumer gas tax and and industrial emissions tax

Consumer Gas Tax:

  • 2018 Gasoline = $0.023 / liter       2022 Gasoline = $0.115 / liter
  • 2018 Diesel = $0.027 / liter             2022 Diesel = $0.135 / liter
  • 2018 Propane = $0.015 / liter         2022 Diesel = $.075 / liter

Industrial Carbon Emissions Tax:

  • The tax is an “output based system” which means it will be charged where the carbon is released (think burning gasoline in your car vs producing gasoline)
  • Only those companies that produce more carbon than the average today will pay the carbon tax
    • Before the end of 2018 the Canadian Government will evaluate each industrial sector (think Oil & Gas, Mining, Transportation…) and determine the current average energy used per unit of output in each of those sectors
    • Companies that produce more carbon than industry average will have to buy carbon credits
    • Companies that produce less carbon than the industry average will be able to sell the difference in carbon credits

Opposition To The Federal Carbon Tax

As expected Opposition parties are panning the plan, but most observers a finding notable holes in the arguments against the Liberal’s Carbon Tax plan.  In June 2017, nearly all Conservative Party members voted to have “…Canada remain committed to the implementation”.

Anecdotally, a quick review of less partisan news sources shows that most Canadians are either in favour of the Federal Carbon Levy or at least resigned to it coming into force.  Few seem to think it will be blocked.

Last week we wrote a price titled “Alberta’s Carbon Tax: The Right Tax at the Right Time?” arguing that Alberta has little choice but to keep its current carbon tax in place for the foreseeable future regardless of which party wins the next Alberta Provincial election, and that this Federal Carbon Tax plan gives all parties political cover to make that happen.


If you want to read the actual proposed “Greenhouse Gas Pollution Pricing Act” law you can source it directly from the Canadian Government HERE.  You will also find the Federal carbon tax “Backgrounder” highlights document to be interesting.


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