Carbon Tax Takes Effect Monday

Ontario one of four provinces affected

It’s the beginning of the federal carbon tax in four provinces across the country.

The tax will be in effect in Ontario, New Brunswick, Saskatchewan, and Manitoba because those provinces did not create their own plans in time for the federal deadline.

For Nunavut and Yukon, which asked to use the federal system, it will begin on July 1st.

Related: Ottawa imposing Tax on Ontarians

This tax will increase every year until 2022.

What is a carbon tax?

It’s a fee imposed on each tonne of emissions from fossil fuels, meant to help lower the amount of greenhouse-gas emissions. Under the new federal levy, oil products such as gasoline and diesel, natural gas and coal-fired electricity will be affected.

Large industrial emitters will be covered by a different system and will be taxed on a portion of their emissions, based on how efficient they are relative to industry peers, Ottawa announced last October 23rd. This is meant to protect industrial competitiveness while still providing an incentive for companies to reduce emissions.

Why?

A United Nations climate change panel report suggested if we don’t act now we face worldwide disasters as early as 2040, including worsening food shortages, droughts, coastal floods, and more wildfires.

Where does the money go?

There are many ways the revenue can be used, such as offering rebates to customers, spending it on emission-reducing measures, lowering other taxes or including it as general revenue.

Will it have an impact?

The federal opposition and the Ontario government are not convinced a carbon tax is the way to go – that it is ineffective – but have yet to offer up solutions of their own.

The tax has proven effective in British Columbia, where emissions are down 4.7 percent in the eight years the tax has been in place there. In Sweden, there’s been a carbon tax since 1991 and emissions have fallen 26 percent.

By one federal estimate, the combined federal and provincial carbon-pricing plans would reduce greenhouse-gas emissions by up to 60 million tonnes in 2020, equivalent to 8.3 per cent of the country’s emissions in 2015.