Ottawa to hike federal carbon tax to $170 a tonne by 2030

Ottawa to hike federal carbon tax to $170 a tonne by 2030-Milenio Stadium-Canada
Prime Minister Justin Trudeau holds a press conference at Rideau Cottage in Ottawa on Tuesday, Dec. 1, 2020. (Sean Kilpatrick / Canadian Press)


Prime Minister Justin Trudeau today released the government’s strategy to dramatically reduce greenhouse gas emissions by 2030 — and its centrepiece is a gradual hike in the federal carbon tax on fuels to $170 a tonne by that year.

Trudeau unveils new net-zero emissions plan to meet climate change targets

Beyond the carbon tax hike, the government is promising $15 billion in new spending on climate initiatives over the next 10 years — money earmarked for improvements to the country’s electric vehicle charging infrastructure, rebates and tax write-offs for zero-emissions vehicles and funding for home retrofits, among dozens of other proposed policies.

The carbon tax will increase significantly from its current level — the tax is just $30 a tonne this year — as part of a push to meet and surpass Canada’s ambitious goal of reducing greenhouse gas emissions by 30 per cent below 2005 levels by 2030.

“Simply put, it would be much harder to cut pollution if it was free to pollute. The principle is straightforward: a carbon price establishes how much businesses and households need to pay for their pollution. The higher the price, the greater the incentive to pollute less, conserve energy and invest in low-carbon solutions,” says the government’s new climate plan, titled, “A Healthy Environment and A Healthy Economy.”

The tax already was expected to hit $50 a tonne in 2022. With this new initiative, the tax will now increase by $15 a tonne each year for the next eight years in order to wean consumers off fossil fuels in favour of cleaner energy sources.

The tax hike will result in higher costs for consumers when they buy gasoline. The price at the pump will increase by 37.57 cents a litre by 2030 as a result of this new plan, and the cost of light fuel oil for home heating, natural gas and propane will rise as well.

To compensate for the cost-of-living increase, the government said it will continue to return most of the money collected by this program through rebates.

Under the current system, the money is returned to individuals and families annually through the ‘Climate Action incentive payment’ when they file tax returns. Starting in 2022, the carbon pollution rebate payments will be distributed on a quarterly basis.

The average family of four in Ontario will collect roughly $2,018 a year in climate rebates by 2030.

The cheques will be higher in provinces like Alberta and Saskatchewan — $3,242 for a family of four in Alberta and $3,829 for a similar family in Saskatchewan — because the people in those provinces generate more carbon emissions per capita.

The carbon tax and the court

Ottawa imposed the carbon tax on jurisdictions that have so far refused to implement their own carbon pricing scheme: Alberta, Ontario, Manitoba and Saskatchewan. The constitutionality of the federal carbon tax is still before the Supreme Court of Canada.

Trudeau dodged questions about what might become of his government’s climate plan if the court decides Ottawa doesn’t have the right to impose such a tax on provinces.

“Unfortunately, there are some jurisdictions that still don’t understand that the only way to build an economy for the future is to protect the environment at the same time. There are still some places in this country that want to make pollution free again,” Trudeau said.

The government also is moving ahead with a new clean fuel standard — a plan to reduce the carbon intensity of fuels and energy use in Canada — but is dropping a push to put similar regulations on gaseous and solid fuels.

The government says it will spend $2.6 billion over seven years, starting in 2020-21, to help homeowners improve the energy efficiency of their homes through about 700,000 home improvement grants worth up to $5,000 each. The government also says it will pay for one million free EnerGuide energy assessments.

The government also is promising to invest $287 million over two years to continue an existing program that provides incentives to people who buy zero-emissions vehicles. The program provides a rebate of up to $5,000 to consumers who buy “light duty zero-emissions” vehicles.

Over the next four years, the government will also spend $964 million to modernize the country’s electricity grid to make it more conducive to renewable energy sources.


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