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Carbon pricing 101: What today's increase could mean for you

The national price on pollution is set to increase by $15 per tonne today, sparking questions about how this change might impact Canadians across the country.

Who foots the bill for carbon pricing?

Canada operates two distinct carbon pricing programs: one targets major industries, requiring companies to pay for a portion of their actual emissions, while the other, known as the consumer carbon levy, applies to everyday purchases of fossil fuels. The consumer levy affects individuals, small and medium-sized businesses, First Nations, as well as public-sector entities such as hospitals, universities, schools, and municipalities.

The April 1 adjustment primarily impacts the consumer levy, which is enforced in all provinces and territories except British Columbia, Quebec, and the Northwest Territories. However, both British Columbia and the Northwest Territories have their own consumer carbon charges, while Quebec operates a cap-and-trade system recognized as equivalent by federal standards.

What falls under the consumer carbon levy?

The levy is applied to over 20 fuel sources known to emit greenhouse gases when burned for energy, including gasoline, propane, diesel, and natural gas. The additional cost varies depending on the emissions produced by each fuel type. For instance, diesel incurs a higher carbon price per litre compared to gasoline due to its higher carbon dioxide output.

How will the increase affect fuel prices?

The impact will be uniform across provinces, except for Quebec:

  • Gasoline: With the carbon price rising from $65 to $80 per tonne, the levy on a litre of gasoline will climb to 17.6 cents, a 3.3 cent increase. Filling a 50-litre tank will now cost about $8.80 in carbon price, up by roughly $1.65.

  • Diesel: The carbon price per litre of diesel will increase to 21.39 cents from 17.38 cents.

  • Propane: The carbon price per litre of propane will rise to 12.38 cents from 10.08 cents, affecting the cost of filling a standard 20-pound barbecue tank.

  • Natural gas: The carbon price per cubic metre of natural gas will jump to 15.3 cents from 12.4 cents on average across Canada, resulting in an annual increase of approximately $65 for the average household.

Additionally, carbon pricing indirectly impacts the prices of goods and services as businesses pass on their increased costs.

How does the Canada Carbon Rebate assist?

Provinces subject to the federal carbon price receive corresponding rebates, although specific programs vary. For example, British Columbia's rebate is income-based, while the federal rebate is calculated based on family size. The rebate amounts adjust with carbon price increases, yet households in the Atlantic provinces may not see an increase due to recent exemptions for heating oil.

Rebate amounts vary by province based on factors such as heating usage and driving distances. Notably, rural residents receive a 20 percent top-up. Rebate payments are scheduled quarterly, with the next installment due on April 15.

In summary, while the carbon price increase aims to curb emissions, its effects on Canadian households underscore the importance of understanding and navigating carbon pricing policies and associated rebates.

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