Canada: When The Levy Breaks: Alberta Government Tables The Climate Leadership Implementation Act

Last Updated: June 2 2016
Article by Kimberly J. Howard, Selina Lee-Andersen and Kimberly Macnab

Most Read Contributor in Canada, September 2018

On May 24, 2016, Alberta's provincial government tabled Bill 20 for first reading in the legislature. Otherwise known as the Climate Leadership Implementation Act (Climate Act), Bill 20 furthers the implementation of the provincial government's Climate Leadership Plan released in November 2015. As discussed in a previous post, the Climate Leadership Plan identified carbon pricing as the primary policy tool for reducing emissions in the province. While still subject to debate, the new Climate Act proposes to provide the provincial government with a number of powers to enable the imposition of a carbon levy in the province.

Set to come into force on January 1, 2017, the purpose of the Climate Act is to "provide for a carbon levy on consumers of fuel to be effected through a series of payment and remittance obligations that apply to persons throughout the fuel supply chains." The revenues will only be used for (i) initiatives to reduce greenhouse gas emissions, or more broadly, to support Alberta's ability to adapt to climate change; or (ii) to fund rebates or adjustments related to the levies.

Details of Alberta's carbon pricing model were detailed in its April 2016 budget. As discussed in our earlier blog, the Alberta government anticipates that over the next five years, the carbon pricing regime will generate $9.6 billion, which will be reinvested in the provincial economy. Of that amount, $6.2 billion will be spent on diversifying the energy economy, while the remaining $3.4 billion will provide support for households, businesses and communities adjust to the carbon price.

The Levy

Carbon levies will be implemented on various enumerated transactions across the fuel value chain. However, only some levies must be submitted to the Crown directly. Persons on the ends of the value chain are "direct remitters," and are required to pay their levies directly to the Crown, whereas persons within the value chain must pay the levy to the person from whom they receive the fuel. Levies will also be implemented for prohibited sales of exempt fuels, prohibited uses of exempt fuels, and possession of certain marked fuels.

The Climate Act imposes a duty on vendors which prohibits them from collecting a carbon levy from consumers that have a carbon levy exemption certificate and will be using the fuel for a prescribed purpose (or any of the other exempt purchases set out in section 15(1) of the Climate Act). On the other side of the equation, persons can be required under the Climate Act to pay any outstanding levies; in the case of a corporation, this includes directors.

Various penalties exist for nonpayment of levies, and may be imposed on various persons including officers, by virtue of a delegation of duty provision. Direct remitters, vendors, retail dealers, and consumers can all be liable for fines ranging from $1,000 (for a first offence of a consumer) to $25,000 (for a subsequent offence by a direct remitter) and imprisonment. Such offences are nonetheless subject to the due diligence defence.

The Carbon Tax-Man Cometh: Third Party Payments

We note that the proposed legislation contains a provision for third party payments to be made to the provincial government. Section 39(1) of the Climate Act provides:

"If the Minister has knowledge or suspects that a person is or will be, within one year, liable to make any payment to a person that owes an amount under this Act (referred to in this section as the "debtor"), the Minister may, by written notice, require the person to pay the amount otherwise payable to the debtor in whole or in part to the Minister on account of the amount owing by the debtor."

What this means is that if Party A owes a debt under the Climate Act to the government, and Party B owes a debt to Party A, the government may collect Party A's debt to the government from all or a portion of the amount that Party B owes to Party A. Essentially, section 39 gives the provincial government the power to collect debts owed under the Climate Act through garnishment. It will be interesting to see the extent to which the government will rely on this provision to recover amounts owing by debtors under the Climate Act.

Exemptions to the Levy

There are generally two types of exemptions from these levies: exemptions based on timing within the value chain, and exemptions based on a person's purpose or use for the fuel. The Climate Act gives a process for applying for exemptions, which differs depending on the person's classification as either a "recipient" or a "consumer." Recipients are given a broad definition, generally including anyone who deals with "fuel," from production to sale and everything in between. Consumers only include persons who actually use the fuel, or allow someone to use their fuel at their own expense.

Consumers can apply for a carbon levy exemption certificate, which allows them exemption from levies so long as they provide the certificate upon purchase of the fuel, and they intend to use the fuel for a prescribed purpose. Instead of applying for exemptions for every levy a recipient incurs, recipients can apply for a licence that provides automatic access to refunds or credits to which they would otherwise be entitled. This licence can be suspended or revoked for a contravention of the Climate Act or any other law in Alberta.

Establishment of Energy Efficiency Alberta

Bill 20 also establishes a new government agency called Energy Efficiency Alberta, under the new Energy Efficiency Alberta Act. Energy Efficiency Alberta will have the mandate to:

  • raise awareness among energy consumers of energy use and the associated economic and environmental consequences;
  • promote, design and deliver programs and carry out other activities related to energy efficiency, energy conservation and the development of micro-generation and small scale energy systems in Alberta; and
  • promote the development of an energy efficiency services industry.

Bill 20 also provides Energy Efficiency Alberta with the power to make grants, contributions or loans. While further details on plans for the agency are currently sparse, the provincial government is in the process of taking the necessary steps to launch programming in early 2017.

Small Business Tax Savings

Bill 20 also amends the Corporate Tax Act in order to reduce the small business tax rate. As of January 1, 2017, the rate will be lowered from 3% to 2% in order to help small businesses adjust to the carbon price.

Implications for Albertans

While the Climate Act provides some clarification of the Alberta government's implementation process for its Climate Leadership Plan, observers are left wanting when it comes to some of the details. The impacts of the carbon levy will vary depending on energy use, so there is little detail on the financial impacts of the carbon levy on businesses. However, Alberta Treasury Board and Finance has estimated the impacts on households:

Further, the Climate Act mandates that Energy Efficiency Alberta must prepare and submit a multi-year business plan to the provincial government, including goals, objectives, targets, and a budget. However, at this time, no further detail has been provided on the content of such a plan, or any other information on how Energy Efficiency Alberta will fulfill its mandate.

Given that the province's April 2016 budget allocates $645 million to Energy Efficiency Alberta, it will be worth keeping track of further policy developments and information on the agency as it becomes available. Also notably absent is further detail or information on timing for Alberta's coal phase-out and transition to renewable power. Albertans hoping to find greater clarity on the transition will be disappointed upon a review of the Climate Act, and will need to stay tuned for further developments.

To view original article, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
McLennan Ross LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
McLennan Ross LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions