LILLEY: Trudeau's second carbon tax to cost Canadians big time (2023)

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LILLEY: Trudeau's second carbon tax to cost Canadians big time? ›

Article content. Justin Trudeau's second carbon tax, set to take effect July 1, will soon be costing Canadian families more than $1,000 per year.

The second carbon tax is embedded within federal clean fuel regulations set to take effect on July 1, 2023. The regulations will require producers to reduce the carbon content of their fuels. If they can't meet those requirements, they'll have to pay the second carbon tax.

2008: Dion election proposal

An unpopular revenue-neutral carbon tax was proposed in 2008 during the Canadian federal election, by Stéphane Dion, then leader of the Liberal Party.

In total, 84.1% of GHG emissions in Canada are subject to a positive Net Effective Carbon Rate (ECR) in 2021, up from 70.9% in 2018. With roughly 15 percentage points, the coverage increase is largest for carbon taxes.

Impacts on GDP

The difference in GDP in 2022 would amount to about $2 billion, or 0.1% of GDP. The average annual outlook for real GDP growth over this period would be 1.8%, either with or without federal carbon pricing.

Under the federal system, relief is provided for farmers, fishers, residents of rural and small communities, users of aviation fuel in the territories, greenhouse operators, and power plants that generate electricity for remote communities.

The 27 countries with significant carbon tax include

Argentina, Canada, Chile, China, Colombia, Denmark, The European Union, Japan, Kazakhstan, South Korea, Mexico, New Zealand, Norway, Singapore, South Africa, Sweden, the UK, and Ukraine.

A carbon tax is a tax on energy sources that emit carbon.

Nationally, revenues totalled CA$2.42 billion in 2019. That is expected to increase to CA$8.27 billion in 2022-23 as the carbon price rises. The federal government has set the floor price through the end of the decade. It will increase by CA$15 per year until it hits CA$170 in 2030 (teal line in Figure 2, below).

In 2008, the Canadian province of British Columbia introduced North America's first revenue-neutral carbon tax applied to the purchase or use of fuel in British Columbia. The carbon tax has been hailed as the most comprehensive of its kind, covering approximately 70% of provincial emissions.

Which country has the highest carbon tax? ›

As of April 1, 2022, Uruguay had the highest carbon tax rate worldwide at 137 U.S. dollars per metric ton of CO2 equivalent (USD / tCO2e). Uruguay's carbon tax was first established in January 2022.

There are two overarching systems for pricing carbon in Canada: the fuel charge, which is the carbon tax that Canadians pay on gasoline, diesel, natural gas, and other hydrocarbon fuels; and the output-based pricing system (OBPS), which applies a charge to large industrial emitters.

These increases are primarily due to GHG emissions resulting from human activities such as the use of fossil fuels or agriculture. This changing climate has impacts on the environment, human health and the economy. The indicators report estimates of Canada's emissions of GHGs over time.

For example, a carbon tax on fossil fuels is often regressive in its impact- hurting poorer people relatively more than richer ones. Even when it might be progressive, poorer people still suffer a welfare loss when prices rise, making their consumption basket more expensive.

A carbon tax increases energy costs in proportion to the carbon content of the source of energy. On account of the different carbon-intensity of fuels, price impacts are most significant for energy produced with coal, then petroleum, then natural gas. Higher carbon tax rates cause larger changes in energy prices.

China does not have a carbon tax at this time. Carbon taxes have been advocated by a number of academics.

It returns revenue

The federal carbon tax is required by law to return all revenues to the province where they were collected. Most families (typically lower and middle income families) will receive more in rebates than they pay in carbon taxes.

Fuel charge rates – April 2023 to April 2030

The rates also reflect a carbon pollution price that will increase from $65 per tonne in 2023 to $170 per tonne by 2030.

Carbon taxes are a price tag put on fossil fuel emissions to disincentivize their use and promote a switch to green energy. Carbon pricing captures the external costs of greenhouse gas emissions and ties them to their sources, typically by placing a price on carbon dioxide emissions.

No U.S. state has a carbon tax.

Why is carbon tax bad in Canada? ›

Cons of carbon taxes:

Implemented on their own, carbon taxes can be harmful to lower-income families. These households tend to use a higher percentage of their income on high-emission activities, such as heating homes and transportation, than those with higher income. This makes carbon tax a regressive tax.

Nevertheless, the CICC found that Canada's oil and gas producers have among the lowest average carbon costs of any sector. This contrasts with producers in some other oil-rich countries, like Norway, which makes its oil companies pay a carbon tax on top of the EU's emissions market.

As Russia has no carbon tax or emissions trading in place, it can be vulnerable to future carbon tariffs imposed by the EU or other export partners.

In Germany, CO2 certificates are issued at a fixed price of 30 euros per tonne in 2023 - the same price level as last year, to shield consumers from rising prices in the energy crisis.

Between those years, the federal government raised $22 billion in carbon pricing revenues. With the carbon tax increasing to $65 per tonne, about $8.2 billion is expected to be collected from the carbon tax alone in 2022-23.

For more information, please consult the Caveats and limitation section. Source: World Resources Institute (2022) Climate Watch Country Historical Greenhouse Gas Emissions. In 2019, Canada ranked as the 10th GHG emitting country/region. Canada's share of global emissions decreased from 1.8% in 2005 to 1.5% in 2019.

The OBPS is designed to meet the federal minimum carbon pricing benchmark of CAD 65 (USD 50) in 2023 as set in the 'Update to the Pan-Canadian Approach to Carbon Pollution Pricing 2023-2030 '. The federal cabinet approved Nova Scotia's proposal, and the new system took effect in January 2023.

Article content. The B.C. government introduced a new carbon tax model for industry in its 2023 budget and a modest increase in spending to build climate-resilient provincial roads and bridges.

According to the World Bank, British Columbia's carbon tax policy has been very effective in spurring fuel efficiency gains. Further, the resulting decreases in fuel consumption did not harm economic growth. On the contrary, the province has outperformed the rest of Canada since 2008.

What is the carbon tax in Mexico? ›

A carbon tax was introduced in Mexico for fossil fuel production. Its base rate is USD 3.5/tCO2 and offsets are allowed through Certified Emission Reductions (CERs) units from Kyoto Protocol's Clean Development Mechanism (CDM) registered projects.

Bhutan is the world's first carbon negative country. Mainly because of its extensive forests, covering 70% of the land, the Kingdom is able to absorb more carbon dioxide than it produces.

Côte d'Ivoire citizens pay the highest income taxes in the world according to this year's survey findings by World Population Review.

The Federal Fuel Charge appears as a separate line item on natural gas bills and consumers must pay it just like any other federal charge, such as the GST.

April 1, 2023: $123.90 per 10³m³ (approximately $3.25/GJ) April 1, 2024: $152.50 per 10³m³ (approximately $4.00/GJ) April 1, 2025: $181.10 per 10³m³ (approximately $4.75/GJ)

Swedish carbon tax rates

The carbon tax was introduced in 1991 at a rate corresponding to SEK 250 (EUR 25) per tonne fossil carbon dioxide emitted, and has gradually been increased to SEK 1 330 (EUR 122) in 2023 (currency conversion based on an exchange rate of SEK 10.87 per EUR).

It may surprise you, but Canada is the top polluter per person in the world, followed by America and Russia. China has over 1.3 billion more people than Canada, yet the average Canadian emits far more greenhouse gas emissions – by 24 metric tons in 2014.

POLLUTANTS IN CANADA

In Canada, mining was responsible for more than half (54 per cent) of all reported industrial pollutants in 2020, trailed by oil and gas extraction (16 per cent), utilities (7 per cent), primary metal manufacturing (6 per cent) and petroleum and coal products manufacturing (five per cent).

Human activities are responsible for almost all of the increase in greenhouse gases in the atmosphere over the last 150 years. The largest source of greenhouse gas emissions from human activities in the United States is from burning fossil fuels for electricity, heat, and transportation.

Because carbon-intensive industries tend to be highly capital-intensive and getting prices right will reduce demand for capital relative to labor, causing not only capital returns to fall relative to wages, but also increasing economy-wide labor demand.

What is the argument for carbon tax? ›

Carbon taxes minimize the total cost to society of emission reductions. Greenhouse gases are a classic negative externality, Meli noted — they generate substantial costs that are borne by society at large, not just the person or organization responsible for the emissions.

Under a carbon tax, the government sets a price that emitters must pay for each ton of greenhouse gas emissions they emit. Businesses and consumers will take steps, such as switching fuels or adopting new technologies, to reduce their emissions to avoid paying the tax.

How much revenue might a carbon tax raise? The amount of revenue raised depends on the level of the tax, how broadly it is applied, and other factors. Most experts suggest a tax of around $25 per ton of CO2, which would raise approximately $125 billion annually.

Because these taxes increase the prices of fossil fuels, electricity, and general consumer products and lower prices for fuel producers, they promote switching to lower-carbon fuels in power generation, conserving on energy use, and shifting to cleaner vehicles, among other things.

What are the estimates of the social cost of carbon? They vary. The Obama administration initially estimated the social cost of carbon at $43 a ton globally, while the Trump administration only considered the effects of carbon emissions within the United States, estimating the number to be between $3 and $5 per ton.

The carbon levy will be introduced from around 2028/29 on fossil fuel importers such as refiners, trading houses and electricity utilities. The initial levy will be set low but will gradually rise.

Comparably, the Chinese tax rates are higher, meaning many American expats in China would pay more in tax locally than in the U.S.

British Columbia, New Brunswick, the Northwest Territories and Quebec have their own independent plans for both parts. In 2022, the federal carbon price was $50 per ton of carbon dioxide. The price will be going up by $15 a ton each April until it reaches $170 a ton in 2030. What does all this mean for you?

What is the CAIP. The CAIP is a tax-free amount paid to help individuals and families offset the cost of the federal pollution pricing. It is available to residents of Alberta, Saskatchewan, Manitoba and Ontario. It consists of a basic amount and a supplement for residents of small and rural communities.

Does BC have two carbon taxes? ›

The British Columbia carbon tax has been in place since 2008. It is a British Columbia policy that adds additional carbon taxes to fossil fuels burned for transportation, home heating, and electricity and reduces personal income taxes and corporate taxes by a roughly equal amount.

It is not. In fact, the most effective thing the federal carbon taxes – which are going up again in 2023 – does is fill government coffers. 74 per cent of carbon tax revenue goes straight to general revenue on Ottawa's books. 14 per cent goes back to taxpayers, somehow.

No U.S. state has a carbon tax.

These credits can be traded to make up for the production of greenhouse gases generated by industry, transportation or other activities. We can generate carbon credits from forests and other natural areas, such as wetlands by calculating the amount of carbon stored in the biomass (trees, soil, plants, etc.).

On the other hand, British Columbia had the highest carbon tax in Canada for years yet B.C.'s emissionsincreased by about eight per cent between 2015 and 2019. Canada's emissions also increased during the first year of Trudeau's national carbon tax.

As part of the federal government's carbon pricing program, a carbon charge applies to fossil fuels sold in Ontario, including natural gas. On April 1, 2023, the federal carbon charge for natural gas increased to 12.39 cents per cubic metre (m³). This charge increases annually each April.