Manitoba 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. The Government of Canada worked with provinces and territories on this plan for over two years.
On October 3, 2018, the Government of Manitoba announced that it no longer intends to establish and implement a carbon pollution pricing system. Therefore, the federal carbon pollution pricing system will apply in Manitoba.
Federal system highlights
The federal pollution pricing system will be implemented in Manitoba under the federal Greenhouse Gas Pollution Pricing Act with the following features:
- For larger industrial facilities, an output-based pricing system for emissions-intensive trade-exposed (EITE) industries will start applying in January 2019. This will cover facilities emitting 50,000 tonnes of carbon dioxide equivalent (CO2e) per year or more, with the ability for smaller EITE facilities that emit 10,000 tonnes of CO2e per year or more to voluntarily opt-in to the system over time.
- A charge applied to fossil fuels, generally paid by registered distributors (fuel producers and distributors) as set out in the Greenhouse Gas Pollution Pricing Act, part 1, will start applying in April 2019. Information on targeted relief for rural and remote residents, farmers, and fishers is available from Finance Canada.
Use of proceeds
The Government of Canada has committed to return all direct proceeds collected in Manitoba, under the federal carbon pollution pricing backstop system, through direct payments to families and investments to reduce emissions, save money, and create jobs. In Manitoba, we will return the direct proceeds as follows:
- Climate Action Incentive payments: Under the proposed approach, most of the proceeds the federal government collects from Manitoba through the fuel charge will be returned directly to Manitoba individuals and families through Climate Action Incentive payments 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 Manitoba, this amount is estimated at $190 million over the next five fiscal years.
- Direct proceeds from industrial facilities under the federal output-based pricing system will be directed to supporting reductions in greenhouse gas emissions in Manitoba.
How Climate Action Incentive payments will be calculated – a Manitoba family of four will receive $339 in 2019
Under the proposed approach, individuals in Manitoba will receive a tax-free Climate Action Incentive payment after filing their 2018 tax return, starting in early 2019. Climate Action Incentive payments in Manitoba will be calculated as follows for 2019:
- $170 for a single adult or the first adult in a couple.
- $85 for the second adult in a couple. Single parents will receive this amount for their first child.
- $42 for each child in the family (starting with the second child for single parents).
Under this proposal, a Manitoba family of four will receive $339 in 2019. The average household in Manitoba will receive $336, taking into account the various family sizes and circumstances.
Family of five
Jacob and Melody, who have three children (aged four, six, and eight), live in Winnipeg. They decide that Jacob will be the parent claiming the Climate Action Incentive payment for their family when he files his 2018 tax return in early 2019. He will claim $170 for himself, $85 for Melody, and $42 for each of their three children, for a total amount of $381. Jacob will see this full amount when his tax return is assessed.
Supplement for residents of small and rural communities
To further support small and rural community residents in Saskatchewan, the Government proposes to provide a supplementary Climate Action Incentive 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 CanadaFootnote 2 .
Delivery of payments
Under the proposal, individuals will claim the Climate Action Incentive payment 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. There will be one claim per family.
The provision of Climate Action Incentive payments through the Canada Revenue Agency will ensure timely, accurate, and cost-efficient delivery.
Single parent with two children, eligible for the small and rural community supplement
Joann is a single mother who lives in Virden, Manitoba, with her six-year-old twins. Under the proposed Climate Action Incentive payment, Joann will claim $170 for herself, $85 for one of her children, and $42 for her other child, when she files her tax return in early 2019, for a total Climate Action Incentive payment of $297. Given that the family lives in a small and rural community, Joann will indicate on her tax return that her family qualifies for the small and rural community supplement, meaning that her payment will be boosted by 10 per cent. As a result, Joann will see an amount of $327 when her tax return is assessed.
Impact on individuals and families
Climate Action Incentive payments enable 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 Manitoba will receive more in Climate Action Incentive payments 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
Climate Action Incentive payments 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 Climate Action Incentive payment amounts, reflecting the increasing price on pollution and updated levels of direct proceeds.
Based on current projections, Climate Action Incentive payment amounts (excluding the supplement for residents of small and rural communities) in future years would be as follows:
|Family of four||$499||$654||$801|
Building on the examples above, based on current projections, in 2022, Jacob will receive $900 for his family of five, and Joann will receive $772 for her family of three (including the supplement for residents of small and rural communities).
Federal fuel charges – Starting in April 2019 and increasing in stringency over time, the federal pollution pricing system will add a nominal cost to everyday fuels.
In Manitoba, for example, the fuel charge on gasoline, in 2019, will be 4.42 cents per litre and the fuel charge for natural gas used in home heating will be 3.91 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, the average cost impact for a household in Manitoba is $232 in 2019, which is less than the corresponding average for Climate Action Incentive payments ($336). Households in Manitoba 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.
Studies consistently show the cost of inaction is much greater than the cost of addressing climate change. Extreme weather events like floods and wildfires are becoming more severe and happening more frequently due to climate change. These disasters can carry huge costs from damaged homes, businesses, and infrastructure. For example, insurance losses related to climate change and severe weather averaged $405 million per year, between 1983 and 2008, and $1.8 billion, between 2009 and 2017.
Canada’s clean growth investments in Manitoba
Since 2016, the Government of Canada has allocated over $628 million for investments in Manitoba for public-transit projects. Helping expand the bus fleet in Thompson is one way we’re keeping Canadians moving and reducing pollution. In Winnipeg, federal investments are helping add buses and build cycling infrastructure. These are the ways we’re working to make sure that public transit is available for all and that people can get where they need to go—quickly and safely—while reducing pollution. These measures are part of the Government’s Investing in Canada Plan.
Over $451 million is allocated for investments in Green Infrastructure in Manitoba, for projects that reduce emissions, build resilience to the impacts of climate change or provide additional environmental benefits such as clean air and clean water. The governments of Manitoba and Canada are working together to fund priority projects that will help reduce pollution and grow the economy.
Canada is investing in electric-vehicle charging stations to help people drive to more places with low emission vehicles. Natural Resources Canada’s Electric Vehicle and Alternative Fuel Infrastructure Demonstration program provided $8 million to support the development of an electric-vehicle fast-charging network across the Trans-Canada Highway, which will serve rural areas. The network will include 34 stations, each with three charging heads, connecting Ontario to the Manitoba-Saskatchewan border along the Trans-Canada Highway. Expanding the charging network helps support Canadians interested in purchasing hybrid plug-in and fully electric vehicles.
To protect Canadians from the impacts of climate change, Canada is collaborating with Manitoba and other prairie provinces to create a regional climate organization to jointly deliver climate services with the Government of Canada’s Canadian Centre for Climate Services. Canada has also supported the Prairie Climate Centre’s Climate Atlas. The Climate Atlas gives Canadians access to information that helps them respond to the impacts of climate change. In addition, other specific initiatives supported include $247.5 million for flood management infrastructure in the Lake Manitoba and Lake St. Martin outlet channels, provided through the Disaster Mitigation and Adaptation Fund. These investments help make sure that Manitoba is ready to face the impacts of climate change and that Canadians will remain safe.
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