National carbon price and rebates rise Saturday in Ontario, Prairies

Canadians in the prairies, two territories and Ontario will pay a bit more to fill their gas tanks or heat their houses next month as the national carbon price rises Saturday.

At the same time, the government is increasing the size of the carbon price rebate cheques issued to families to offset the cash crunch to family budgets.

"Pollution pricing works," Environment Minister Steven Guilbeault said in a written statement Thursday. "It fights climate change, it puts money back in the pockets of Canadians and it helps grow a strong, sustainable economy."

The consumer carbon price is charged on most fuels when you buy them, such as when you fill up your car with gas or fill a propane tank for your barbecue or RV.

This year, the carbon price for individuals and small businesses will increase by $15 per tonne of greenhouse gases emitted by each fuel, to a total of $65 per tonne. On April 1, that will take effect in Ontario, Manitoba, Saskatchewan, Alberta, Yukon and Nunavut.

On July 1, the four Atlantic provinces are joining the federal scheme. They previously had provincial systems that met the federal standard, but that wouldn't have met the new standards set by Ottawa going forward.

Quebec has its own cap-and-trade system, British Columbia uses an approved provincial carbon price and Northwest Territories has its own territorial carbon pricing policy.

The increase will add $1.30 to the cost of filling a 40-litre tank, and $5.22 to the average monthly household natural gas bill. A 20 lb. propane tank will cost another 77 cents to fill.

The goal is to encourage people to cut back on their use of greenhouse-gas emitting fuels, while limiting the impact on a household budget through rebates.

The rebates are still offered at the same amount, no matter what a household does to curb fuel costs, and they are based on the average carbon price paid in each province. There are variations between provinces due to different sources of electricity, climate and geography, with colder areas using more fuel for heat.

This coming year, the rebates will increase by 24 per cent in Saskatchewan, 27 per cent in Manitoba, 31 per cent in Ontario and 43 per cent in Alberta. The law requires that 90 per cent of carbon price revenues be rebated to families.

Each year, the rebates are adjusted up or down in each province depending on whether the amount paid in the previous year was above or below that 90 per cent threshold.

Single individuals will receive four quarterly payments, starting in April, worth a total of $722 in Alberta, $622 in Saskatchewan $528 in Manitoba and $488 in Ontario. For a family of four, the rebates over the next 12 months will total $1,544 in Alberta, $1,360 in Saskatchewan, $1,056 in Manitoba and $976 in Ontario.

A new report Thursday by the parliamentary budget officer said that on average, people in every province will pay less than they get back, ranging from average net gains of $29 in Prince Edward Island to $492 in Alberta.

In some provinces, such as Manitoba and Ontario, people at the highest income levels will pay more than they get back, largely because they live in bigger homes and are more likely to drive bigger cars or have multiple vehicles.

For example, in Alberta, the rebate will exceed the carbon price cost by $535 this year for the lowest income earners, while a family in the top 20 per cent of earners will pay $135 more in Ontario and $177 more in Manitoba.

But the PBO report also says the overall economic impact of the carbon price could drive down incomes and result in job losses, which could mean many families are not better off by 2030 under a carbon pricing system.

That had Conservative Leader Pierre Poilievre gloating during the House of Commons question period Thursday. The Conservatives have campaigned against carbon pricing for years, and Poilievre made clear as recently as Wednesday that if they win the next election, the carbon price for individuals will be gone.

"The fuel levy is a tax on consumers for doing things they have no choice but to do. People need to heat their homes and drive their cars," he said.

He added that the PBO report "revealed that Nova Scotians and Newfoundlanders, just like people right across the country, pay about $1,500 more in carbon taxes than they get back in rebates, directly contradicting the government."

However, the net loss figures do not refer to how much people pay in carbon pricing compared to the rebate, but rather the negative hits they may face to employment or investment income as a result of the policy.

Michael Bernstein, executive director at the non-profit think tank Clean Prosperity, dismissed that analysis as lacking context.

He pointed out that the report acknowledges it is not comparing the possible negative effects of the carbon pricing policy to the ills that would result from not tackling climate change. He said it's an unfair analysis when you look at only the economic impact of doing a policy, and not at the impact of not doing it.

Last fall, the PBO issued a separate report that said that even if Canada enacts all its climate-change policies, the GDP will be 0.08 percentage points lower every year as a result of climate change. That figure would be higher if less is done to slow climate change.

Guilbeault said the PBO's carbon price analysis also ignores the economic gains expected from massive investments in climate-change policies, including billions to expand clean-tech industries such as hydrogen, green electricity and electric vehicles.

This report by The Canadian Press was first published March 30, 2023.