Alberta and pollution pricing
Protecting the environment and growing the economy go together. In 2016, the federal government worked with provinces, territories, and with input from Indigenous Peoples on Canada’s first comprehensive climate action plan, which includes a stringent, fair, and efficient price on carbon pollution.
As part of Canada’s plan, provinces and territories had the flexibility to maintain or develop a carbon pollution pricing system that works for their circumstances, provided it meets the federal standard.
Alberta has been a leader in pricing carbon pollution in Canada. It was the first province to put an output-based pricing system in place, in 2007, and had a carbon levy on fuel in place from 2017 until its repeal as of May 30, 2019.
As a result of the repeal of its carbon levy, Alberta now only partially meets federal benchmark stringency requirements. On June 13, 2019, the federal government announced its intent to implement the federal fuel charge in Alberta as of January 1, 2020, to ensure carbon pollution pricing continues to apply in Alberta. In addition, the federal government announced that it will monitor any proposed changes to Alberta's large industrial emitter system, and will undertake another benchmark assessment once sufficient details about the new system for large emitters are available. The Government is also open to working with the Government of Alberta to determine the most appropriate treatment of small oil and gas facilities under the carbon-pricing regime.
Please contact the Province of Alberta for additional details and information on its pollution pricing system and programs.
Alberta system highlights
- Alberta eliminated its carbon levy as of May 30, 2019.
- Alberta’s output-based pricing system for large industrial emitters has been in place since 2007, initially under the Specified Gas Emitters Regulation (SGER), January 1, 2018 with the Carbon Competitiveness Incentive Regulation (CCIR).
Federal system highlights
The federal carbon pollution pricing system will be implemented, in part, in Alberta under the federal Greenhouse Gas Pollution Pricing Act. A charge on fossil fuels, generally paid by registered distributors (fuel producers and distributors), as set out in Part 1 of the Act, will start applying as of January 1, 2020, with a carbon pollution price of $20 per tonne of carbon dioxide equivalent (CO2e). Information on targeted relief for rural and remote residents, farmers and fishers is available from Finance Canada.
Use of proceeds
The Government of Canada will return all direct proceeds collected in Alberta from the federal fuel charge through direct payments to families and investments to reduce emissions, save money and create jobs as follows:
- Canada Carbon Rebate (CCR) (formerly known as Climate Action Incentive Payment): The bulk of the direct proceeds from the federal fuel charge in Alberta will be returned directly to eligible individuals and families residing in Alberta through CCR, starting in early 2020, through 2019 personal income tax returns.Footnote 1
- Support for particularly affected sectors: The remainder of fuel charge proceeds will be used to provide support to the province’s schools, hospitals, small and medium-sized businesses, colleges and universities, municipalities, not for profit organizations and Indigenous communities, which will help save money and create good jobs. In Alberta, this amount is estimated at $610 million over the next four fiscal years.
How the Canada Carbon Rebate will be calculated - an Alberta family of four will receive $888 in 2020
Exceptionally, the first CCR claimed by eligible Albertans will reflect fuel charge proceeds generated over a 15-month period. This consists of three months (January-March 2020) with a carbon price of $20, plus 12 months (April 2020-March 2021) with a carbon price of $30.
For residents of Alberta, the proposed CCR amounts for 2020 are as follows:
- $444 for a single adult or the first adult in a couple.
- $222 for the second adult in a couple. Single parents will receive this amount for their first child.
- $111 for each child in the family (starting with the second child for single parents).
Based on these proposed amounts and taking into account the various family compositions and circumstances, households in Alberta will receive $880 on average, in early 2020, which consists of $126 for the first three months of the fuel charge (January-March 2020) and $754 for the next 12 months (April 2020-March 2021).
In future years, as in other jurisdictions where the CCR is available, payments will reflect direct fuel charge proceeds generated over a 12-month period (from March through April) at a given carbon price.
Example: Family of four
Andrew and Ann, who have two young children, live in Edmonton. They decide that Ann will be the parent claiming the CCR for their family when she files her 2019 tax return in early 2020. She will claim $444 for herself, $222 for Andrew, and $111 for each child, for a total amount of $888. She will see this full amount when her tax return is assessed.
Supplement for residents of small and rural communities
To further support small and rural community residents in Alberta, the Government of Canada will also provide a supplementary amount for people who live in small and rural communities, in recognition of their increased energy needs and reduced access to energy-efficient transportation options. This supplement will be an additional 10 per cent of the payment amount to which they are entitled. Small and rural communities will be defined as anywhere outside of a census metropolitan area (CMA), as defined by Statistics Canada.Footnote 2
Single parent with one child eligible for small and rural communities supplement
Eva is a single mother who lives in Youngstown with her five-year-old son. Under the CCR, Eva will claim $444 for herself and $222 for her son when she files her 2019 tax return in early 2020, for a total CCR of $666. Given that the family lives in a small or rural community, Eva will indicate on her tax return that her family qualifies for the small and rural communities supplement, meaning that their payment will be boosted by 10 per cent. As a result, Eva will see an amount of $733 when her tax return is assessed.
Delivery of payments
Individuals will claim the CCR on their tax return. This will involve filling out a short schedule identifying the number of adults and children in the family unit for which payments would be claimed, and whether the family lives in a small or rural community. There will be one claim per family.
The provision of the CCR through the Canada Revenue Agency will ensure timely, accurate, and cost-efficient delivery.
Impacts on individuals and families
The CCR enables the Government to encourage lower greenhouse gas (GHG) emissions without imposing a financial burden on households. The federal backstop system helps the environment and the economy because it puts a price on pollution and supports cleaner alternatives. Most households in Alberta will receive more in CCR than they incur in total costs resulting from pollution pricing. As the pollution price itself encourages fewer GHG emissions, it will both protect the environment and promote green innovation.
Payment amounts in subsequent years
The CCR will increase annually to reflect increases in the price on pollution under the federal backstop system, until at least 2022. The federal Minister of Finance will make annual announcements of CCR amounts, reflecting the increasing price on pollution and updated levels of direct proceeds.
Based on current projections, CCR amounts (excluding the supplement for residents of small and rural communities) in future years would be as follows:
|Carbon pollution price*
|Single adult, or first adult in a couple
|Second adult in a couple, or first child of a single parent
|Each child under 18 (starting with the second child for single parents)
|Baseline amount for a family of four
*As of April 1 of each year. Building on the examples above, based on current projections, in 2022, Ann will receive $1,200 for her family of four, and Eva will receive $990 for her family of two (including the supplement for residents of small and rural communities).
Targeted relief for farmers and fishers, and residents of rural and remote communities
The Government also recognizes that particular groups and sectors—including farmers and fishers, and residents of remote communities—require targeted relief from the fuel charge because of the more limited number of alternative options they may have to respond to carbon pollution pricing.
Details on this relief can be found in the Department of Finance Canada Backgrounder: Targeted Relief for Farmers and Fishers, and Residents of Rural and Remote Communities as well as in the Department of Finance Canada news release Department of Finance Canada Proposes Refinements to the Federal Carbon Pollution Pricing System.
Support for municipalities, universities, schools and colleges, hospitals, non-profits, and indigenous communities
In recognition of the fact that universities and colleges, hospitals, schools, municipalities, non-profit organizations, and Indigenous communities can expect to incur additional costs as a result of pricing carbon pollution, the Government will return a portion of the proceeds collected through the federal carbon pollution pricing system to help these groups take climate action, and this will also help them lower their energy costs. Context for this support (predating Alberta’s coverage by the federal system) can be found in the Department of Finance Canada Backgrounder: Support for Municipalities, Universities, Schools and Colleges, Hospitals, Non-Profits, and Indigenous Communities.
Support for small and medium-sized businesses
Small and medium-sized enterprises (SMEs) are a critically important part of the Canadian economy. The Government recognizes that SMEs can expect to incur additional costs as a result of carbon pollution pricing, and is committed to providing additional support to help them take climate action, and lower their energy costs while remaining competitive. Context for this support (predating Alberta’s coverage by the federal system) can be found in the Department of Finance Canada Backgrounder: Support for Small and Medium-Sized Businesses, as well as in the Environment and Climate Change Canada news release Canada to help small businesses invest in energy-saving equipment and retrofits.
Federal Fuel Charges – Starting on January 1, 2020 and increasing in stringency over time, the federal fuel charge will add a nominal cost to everyday fuels.
In Alberta, for example, in April 2020 the fuel charge on gasoline will be 6.63 cents per litre and the fuel charge for natural gas used in home heating will be 5.87 cents per cubic metre – these rates will increase over time. A complete list of fuel charge rates is available on Finance Canada’s website.
Estimated Annual Costs – We know from experience in British Columbia, Alberta, and Quebec that provinces with a price on carbon pollution in 2017 were the fastest-growing economies in Canada.
Under the federal system, households in Alberta will receive $880 on average, in early 2020, which consists of $126 for the first three months of application of the fuel charge (January-March 2020) and $754 for the next twelve months (April 2020-March 2021). These amounts are greater than the estimated average cost impacts per household (which are $101 for the first three-month period and $610 for the following 12-month period). Residents of Alberta can also reduce this cost through many options, such as better home insulation, switching to a more fuel efficient vehicle, using public transit, and lower cost solutions like LED lightbulbs.
Canada’s clean growth investments in Alberta
The federal government’s Low Carbon Economy Fund is reducing emissions and creating opportunities in Alberta by providing nearly $150 million to support projects that:
- Install energy efficiency measures in affordable housing, businesses, not-for-profit organizations, and institutions, helping modernize buildings and making life more affordable.
- Give instant rebates for everyday products that help save energy and save money. Eligible products include LED bulbs and fixtures, water-saving devices, smart power bars, dimmers and motion sensors, and programmable thermostats.
- Install solar power in Indigenous communities and support other energy-efficient upgrades, bringing energy costs down for the community.
- Replant forests in the areas devastated by wildfires.
Since 2016, the Government of Canada has allocated over $2.4 billion for investments in public-transit projects in Alberta. Calgary’s Green Line light-rail project will take people, from north to south, faster, and more safely than ever. We’ve also made investments in Medicine Hat and Lethbridge and helped build bus stops throughout the municipality of Wood Buffalo. These are ways we’re making sure that public transit is available for all and that people can get where they need to go, quickly and safely, while reducing pollution. It’s a part of the Government’s Investing in Canada Plan.
The Government also allocated over $1 billion for investments in Green Infrastructure in Alberta, for projects that reduce emissions, build resilience to the impacts of climate change, or provide additional environmental benefits. The governments of Alberta and Canada are working together to fund priority projects that will help reduce pollution and grow the economy.
The Government of Canada is investing in emission-reduction projects. Natural Resources Canada has provided over $9.5 million through its Clean Technology Research, Development, and Demonstration program to support a state-of-the-art research facility at the Alberta Carbon Conversion Technology Centre, in Calgary, which will allow new clean technologies to be tested on a near-commercial scale.
The federal government is also making direct investments to support the development and deployment of clean technologies. For example, through Sustainable Development Technology Canada, $10 million was provided to support Alberta’s MEG Energy Corp. to develop and deploy a new technology that reduces the amount of steam required for bitumen production. This new technology is expected to reduce the greenhouse gas emission intensity by as much as 43 per cent.
To protect Canadians from the impacts of climate change, the Government of Canada is working with Alberta and other prairie provinces on a regional climate-adaptation centre to jointly deliver climate services with the Government of Canada’s Canadian Centre for Climate Services. Other specific initiatives to increase resilience to climate impacts within Alberta include educating and raising awareness, working with Indigenous communities to assess the risks posed by forest fires, and floodplain mapping.
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