On October 23rd, the government announced how and to whom its federal carbon pricing system will apply across Canada, and how revenue collected through the carbon fuel charge will be distributed.
Business, economic and civil society leaders support carbon pricing:
Oct 23rd carbon pricing backstop announcement
- The federal fuel charge will apply in: Saskatchewan, Ontario, Manitoba, New Brunswick, Yukon, and Nunavut, but Yukon and Nunavut can choose for themselves how revenues will be used. The federal Output Based Pricing System (OBPS) for large emitters will apply in: Ontario, Manitoba, New Brunswick, PEI, Yukon, Nunavut, and partially in Saskatchewan.
- Carbon price revenues from the fuel charge will be fully refunded to taxpayers in those 4 provinces, in a manner that does not diminish the effectiveness of the price signal
- 90% will be refunded directly to individuals, in lump sums. 7 out of 10 households will be better off financially as their refunds offset direct and indirect costs associated with the carbon price.
- The other 10% will be allocated to a fund for hospitals, schools, SMEs, municipalities, non-profits, and Indigenous communities, to support energy efficiency and low carbon investments.
- Large industry emitters are already exempt for about 80 - 90% of the sectors average intensity through the output-based pricing system (announced previously)
- The output-based pricing system will take effect on January 1, 2019, and the fuel charge will take effect in April 2019 in most areas.
For a more detailed breakdown, read our technical blog: Carbon Pricing in Canada: Oct 23 Announcement on Rebates and Costs – Following the Money
More info & resources on carbon pricing effectiveness & design:
- Canada’s Ecofiscal Commission: Clearing the Air: How carbon pricing helps Canada fight climate change.
- Canada’s Ecofiscal Commission: Supporting Carbon Pricing: How to identify policies that genuinely complement an economy-wide carbon price
- Canada’s Ecofiscal Commission: The Way Forward
- Smart Prosperity Institute: The proof points: Carbon pricing, clean innovation & competitiveness
- Smart Prosperity Institute:Technical Design of the Federal Output Based Pricing System
- Smart Prosperity Leaders' Initiative: Take bold action on clean growth & climate change
- Smart Prosperity Leaders' Initiative: Accelerating Clean Innovation
- Smart Prosperity Leaders' Initiative: Canadian leaders support action on carbon pricing & clean competitiveness