Alberta to increase industrial carbon tax to $50/tonne to match federal requirements

March 6, 2020

Jason Kenney, Premier of Alberta, yesterday confirmed that the Technology Innovation and Emissions Reduction (TIER) levy will increase $10 per year to $50/tonne in 2020, up from the current $30/tonne, to match federal requirements in accordance with the Greenhouse Gas Pollution Pricing Act (GGPPA). This will ensure that the federal levy is not imposed on Alberta’s oil and gas sector. This announcement comes after the recent reference case decision of the Alberta Court of Appeals that found the GGPPA unconstitutional in its entirety.  

 

In December 2019, the federal government accepted Alberta’s $30/tonne TIER levy as adhering to the GGPPA. However, acceptance was conditioned on the incremental increase of the levy, which is set to hit $50/tonne by 2022.

 

The TIER regulations, which replace Alberta’s Carbon Competitiveness Incentive Regulation on January 1, 2020, apply to facilities that emit 100,000 tonnes CO2e or more per year. The current $30/tCO2e levy will increase to $40/tCO2e in 2021 and $50/tCO2e in 2022. Premier Kenney stated that Alberta has budgeted for, and will be tracking, the federal price for major emitters. Revenue from the levy in Alberta is forecasted to reach $485 million by 2022-23. The recently released Alberta budget partially allocates revenue from the levy to fund emissions-reducing technology in Alberta.

 

Manitoba also recently announced that it will re-enact its flat price on consumer and industry GHG emissions at $25/tonne on consumers and industry, effective July 1, 2020. This is below the federal carbon price of $30/tonne, and it remains uncertain whether the Federal Government will impose a carbon tax to make up the difference. Premier Brian Pallister announced that the flat rate price on carbon will coincide with a 1% decrease in the provincial sales tax. Manitoba is currently also seeking a judicial review of the GGPPA and how the stringency test was applied to Manitoba through the Federal Court of Canada.  

 

Please do not hesitate to contact Lisa DeMarco at lisa@demarcoallan.com to discuss the contents of this bulletin.

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