On June 6, 2016, Alberta passed the Climate Leadership Implementation Act, creating a carbon levy on fuel consumption. This legislation marks the provincial government’s first step towards executing its Climate Leadership Plan. Additional legislation, still pending, is aimed at eliminating emissions from coal-fired electricity generation, capping oil sands emissions and reducing methane emissions.
When the legislation is officially proclaimed, all fuel consumption—including gasoline and natural gas—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., 4.49 cents/liter for gasoline), with the carbon price increasing to CA$30 per ton on January 1, 2018 (6.73 cents/liter). The carbon levy has certain exemptions, including fuel used in the operation of a specified gas emitter and fuel used in farming operations. The legislation creates mechanisms for the assessment of the levy and the enforcement of payment, while providing that corporate 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. According to initial government estimates, more than 60 percent of Albertans will be eligible for full or partial rebates.
Amendments to the Corporate Tax Act will reduce the small business tax rate from three percent to two percent in order to help businesses 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.
On June 8, 2016, the government of Ontario officially announced its five-year Climate Action Plan, which had been leaked to the media in late May. The plan includes 28 key measures aimed at reducing the province’s greenhouse gas emissions and transitioning to a low-carbon economy. It follows on the passage in May of the Climate Change Mitigation and Low-Carbon Economy Act and accompanying regulations. The legislation provided the foundation for Ontario’s cap-and-trade regime, setting out the mechanics of how this system will work and how GHG emissions will be quantified, reported and verified. It establishes emission reduction targets, imposes reporting requirements, creates categories of participants, authorizes the creation and distribution of allowances and the creation of offset credits and establishes enforcement mechanisms. The legislation also authorizes linkage of Ontario's cap-and-trade regime with “corresponding programs” in “other jurisdictions”, such as California and Quebec.
The Climate Action Plan predicts the province will spend up to CA$8.3 billion on a variety of programs, some of which are designed to encourage conversion to more energy-efficient heating systems, the purchase of electric/hybrid vehicles, conversion of large vehicles to natural gas and maximization of carbon storage from agriculture. Funds for these programs are expected to come from the CA$1.8 billion to CA$1.9 billion annual revenue the province predicts will be generated from the cap-and-trade program. The plan also calls for the creation of a “green bank” to deploy and finance readily available low-carbon technologies to reduce emissions from Ontario buildings.