Carbon pricing 101: What April 1 increase could mean for you

The national price of pollution will rise by $15 per tonne Monday. Here are some questions answered about what this could mean for you.

Who pays the carbon price?

Canada has two different carbon pricing programs — one for big industry where companies pay the price on a share of their actual emissions, and a consumer carbon levy which is applied to fossil fuel purchases. The consumer levy affects individuals, small and medium-sized businesses, First Nations, as well as public-sector operations such as hospitals, universities, schools and municipalities.

The price change on April 1 affects the consumer levy, which applies in every province and territory except British Columbia, Quebec and Northwest Territories.

B.C. and Northwest Territories both have their own, very similar carbon charge for consumers. Quebec has a cap-and-trade system that is quite different, but is considered equivalent by Ottawa to what the federal price both costs and cuts in terms of emissions.

What is the consumer carbon levy applied to?

The fuel charge is added to the price of more than 20 different fuel sources that produce greenhouse gas emissions when burned for energy, including gasoline, propane, diesel and natural gas. The additional cost to each fuel depends on how many greenhouse gases are produced when that fuel is burned to make energy.

A litre of diesel produces more carbon dioxide than a litre of gasoline, for example, so the carbon price is higher on a litre of diesel than it is on gasoline.

What is this increase going to do to the price of fuel?

The impact will be similar in all provinces but Quebec.

Gasoline: Going from $65 per tonne to $80, means the carbon price on a litre of gasoline will now be 17.6 cents per litre, up 3.3 cents per litre from before. That means filling a 50 litre tank from empty will cost about $8.80 in carbon price, about $1.65 more than before.

Diesel: As of today the price for a litre of diesel will include 21.39 cents in carbon price, up from 17.38 cents.

Propane: The price for propane will now include 12.38 cents a litre in carbon price, up from 10.08 cents. A standard 20-pound barbecue propane tank will cost about $2.20 in carbon price to fill, compared with $1.78 over the last year.

Natural gas: On average in Canada, households use about 2,280 cubic metres of natural gas in a year, mostly for heat. At $80 per tonne, the carbon price will add 15.3 cents to a cubic metre of natural gas, up from 12.4 cents previously. That amounts to an annual carbon price bill for natural gas of about $347 on average, compared with $282 over the last year.

Food, clothing and other goods: There are indirect costs of carbon pricing, as companies that pay the price themselves increase the cost of their goods and services to keep pace. The amounts vary by industry, but Statistics Canada estimated that carbon pricing increased the price of food by about 0.3 per cent and the price of clothes by two per cent since its inception. The effect of the latest increase has yet to be determined.

How much will the Canada Carbon Rebate help? 

The provinces that pay the federal carbon price also receive the federal rebate. B.C. and Northwest Territories in turn provide their own rebates that are slightly different.

B.C.’s rebate — the Climate Action Tax Credit — is income-based, and about one-third of all households in the province don’t qualify for it.

B.C. and the federal government have both faced calls to scrap the increases and the tax altogether. However, on Thursday, March 28, B.C. Environment Minister George Heyman doubled down on previous remarks, saying the provincial government will be sticking with the carbon tax.

“The first carbon tax in Canada was in British Columbia and it has been effective in reducing emissions,” he said.

“What I say to British Columbians is 100 per cent of the carbon tax increase on April 1 is going back to the climate action tax credits supporting low- and middle-income British Columbians. That’s an important commitment. And at the same time, we have many, many other measures that we’re investing in that are reducing costs for British Columbians.”

What else is rising Monday?

BC Hydro rates are set to increase by 2.3 per cent on April 1. This increase is part of a three-year rate application that was approved by the BC Utilities Commission.

However, the utility points out that the B.C. Electricity Affordability Credit announced in February “will more than offset this increase, which is equivalent to about one-half of the credit.”

“All residential, commercial, and industrial customers who receive the credit will pay less this year than they did last year,” BC Hydro said in an email Thursday.

“The credit will vary based on an individual customer’s annual electricity consumption from the last 12 months. On average, residential households will see a total credit of about $100. Commercial businesses and industrial customers will see a credit of 4.6 per cent – or an average of $400 or $200,000, respectively – to help reduce rising operating costs.”

The utility provider says the credits will be applied to eligible bills in installments for a one-year period starting in mid-April.

The credit is applied automatically, with no need for customers to apply.

The federal alcohol excise tax is set to rise on April 1 by two per cent.

The tax applies to beer, spirits, and wine. In early March, Finance Minister Chrystia Freeland announced the government was capping the annual tax increase at two per cent for an additional two years.

Prior to that, the tax was set to increase by 4.7 per cent, tied to inflation.