Federal Environment Minister Catherine McKenna issued a discussion paper May 18 that offers the first detailed look at Ottawa’s plan to implement carbon pricing across the country by 2018.
But the precise impact on Yukon consumers and businesses remains unclear.
Ottawa’s so-called carbon pricing “backstop” will impose a carbon tax of $10 per tonne of CO2 emissions starting in 2018. The tax will increase by $10 per year until it hits $50 per tonne in 2022.
It’s called a backstop because it will only apply in provinces or territories that don’t have carbon pricing, or where local regimes don’t meet Ottawa’s standards. British Columbia, Alberta, Ontario and Quebec already have some form of carbon pricing. The federal program is modelled on Alberta’s system.
“Making polluters pay is an important part of any climate plan,” McKenna told reporters in Ottawa May 18.
The carbon tax will be collected partly through levies on fuel. The federal levy on gasoline starts at 2.33 cents per litre in 2018 and increases to 11.63 cents per litre in 2022. Dirtier fuels like heavy fuel oil will be taxed at a higher rate. Levies will also apply to other fuels like diesel, aviation gas and jet fuel.
Some fuel importers, distributors and users will have to register with the Canada Revenue Agency for the purpose of collecting or paying carbon levies. That will include airlines and trucking companies.
The plan also includes a cap-and-trade system for large-scale industrial emitters who produce more than 50,000 tonnes of CO2 per year. Lower emitters may also opt in. Polluters that emit less CO2 than their limit can earn credits they can save for later or trade to other industrial users.
Large public-sector buildings, such as schools and hospitals, are exempt from cap-and-trade.
The federal Liberals have said that jurisdictions where the backstop is in place will get all carbon tax revenue back, but the government has yet to say exactly how that will happen. On Thursday, McKenna said she is looking at rebates to individuals and businesses which would bypass provincial and territorial governments completely.
“Not a single dollar goes back to Ottawa,” she said.
Peter Turner, president of the Yukon Chamber of Commerce, said he’s not particularly concerned with the initial fuel price levies. “That’s within the normal range of what we’ve seen with gas price swings,” he said, adding the 2022 fuel levies of 11 or more cents per litre could take a toll on businesses.
That’s why Turner said he wants to see a portion of carbon tax rebates directed to business to help them reduce their fossil fuel consumption. He also wants to see special help for miners, who sell commodities with prices fixed by global markets, and who can’t pass on higher costs to customers.
Premier Sandy Silver said his government was still talking with Ottawa about how carbon tax revenues would be returned to the Yukon. Silver said it was vital that any rebate program not “penalize people who can’t reduce” their carbon footprint, but could not give specifics about how that might work.
He said Yukoners will know how carbon tax revenues will be returned when the federal Liberals introduce enabling legislation in the fall. He has previously pledged that any carbon tax will be “truly revenue neutral for Yukon business and Yukon families.”
Silver also said he suspected the impact of the cap-and-trade component for large industrial emitters would likely have little impact on the Yukon’s economy because the territory currently has no industrial operations that produce 50,000 tonnes of carbon per year, though that could change with several large mining projects working their way through the regulatory system.
The premier did accuse the Yukon Party of overstating the impact of carbon pricing on the economy.
“The sky’s not falling on this one,” he said.
But Scott Kent, the Yukon Party’s economic development critic, said the prospect of gas tax hikes of approximately 12 cents per litre by 2022 “is pretty concerning.” The discussion paper said by 2022 a 50-litre tank of gas would cost about $5.82 more.
Kent said he is also concerned about the impact carbon pricing will have on the aviation and mining industries. He said waiting until the fall to see details of how rebates would work is “disappointing.”
“Yukoners are pretty anxious to see details,” he said.
Saskatchewan Premier Brad Wall, meanwhile, has said his province plans to take Ottawa to court over its imposition of carbon pricing. He called Thursday’s discussion paper “frankly more like a ransom note.”
With a report from CP
Contact Chris Windeyer at firstname.lastname@example.org.