The Alberta Government introduced Bill 20, the Climate Leadership Implementation Act, on May 24, 2016. The Bill proposes a carbon levy on fuel consumption and marks the Government’s first step towards executing Alberta’s Climate Leadership Plan. Additional legislation aimed at eliminating emissions from coal-fired electricity generation, capping oil sands emissions and reducing methane emissions is still pending. Currently, the Specified Gas Emitters Regulation remains in full force and effect.
Bill 20 proposes two new statutes, the Climate Leadership Act and the Energy Efficiency Alberta Act, while also making minor, corollary amendments to three existing pieces of provincial legislation. The proposed legislation passed its first reading in Parliament and will become law upon receiving Royal Assent.
Under the Climate Leadership Act, all fuel consumption—including gasoline and natural gas consumption—will be subject to a carbon levy to be effected through a series of payment and remittance obligations throughout the fuel supply chain. Commencing on January 1, 2017, consumers of fuel will pay levies at rates based on CA$20 per ton of carbon (e.g. 4.99 cents/litre for gasoline), with the carbon price increasing to CA$30 per ton on January 1, 2018 (6.73 cents/litre). There are certain exemptions from the carbon levy, including fuel used in the operation of a specified gas emitter and fuel used in farming operations. The Climate Leadership Act creates mechanisms for the assessment of the levy and the enforcement of payment, while providing that directors can be held jointly or severally liable for payment if their corporation fails to remit the required carbon levy.
The revenue generated from the carbon levy will be applied to provincial climate change initiatives, while also producing rebates for qualified individuals and businesses. Initial estimates state that more than 60 percent of Albertans will be eligible for full or partial rebates.
The Energy Efficiency Alberta Act establishes a new Crown corporation, Energy Efficiency Alberta. The provincial agency will have a mandate to raise awareness among energy consumers, design and deliver programs related to energy conservation and small scale renewable energy systems, and to promote the development of an energy efficiency services industry. Energy Efficiency Alberta will consult with stakeholders and citizens to encourage a reduction in energy use and to raise awareness of consequences of energy consumption.
Amendments to the Corporate Tax Act will reduce the small business tax rate from three to two percent in order to allow businesses to adapt to the carbon levy, while amendments to the Alberta Personal Income Tax Act will provide for the eligibility and calculation methods pertaining to the Alberta Climate Leadership Adjustment Rebate. Finally, amendments to the Climate Change and Emissions Management Act broaden the accepted use and purpose of the Climate Change and Emissions Management Fund to encompass education initiatives and outreach programs.
The Dentons Climate Change group will continue to track and report on further legislation, including the pending regulations referred to above. If you wish to receive our Climate Change Newsletter please contact us.
This article was co-authored by Kim Martyn, an Articling Student in Dentons' Calgary office.