It is oft said by those who disapprove of carbon taxes that: Carbon taxes are ineffective Carbon taxes target the wrong people The Canadian Federal Government does not have right to impose a carbon tax All three of these statements are demonstrably incorrect. University of Ottawa Professor of Law and Read more…
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
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
It used to be very clear that Alberta had a spending problem and not a revenue problem. However, since the 2014 oil crash, the world and Alberta have forever changed. Historically, oil ‘busts’ were the result of a downturn in some key economy that reduced the demand for oil & gas products. Today we have the worlds first notable price downturn caused by over production of oil, with no end in site.
This over production was started intentionally by Saudi Crown Prince Mohammed bin Salman in an effort to kill shale oil fracker’s and other non-state owned small players. The idea was to have OPEC lead an over production that would drop the price of oil for a few years and force the marginal upstart players (i.e. US based frackers) out of the industry. Then Saudi lead OPEC would reduce supply and drive the price back up. Well, the Crown Prince was wrong and it didn’t work.