On June 6, 2016, Alberta passed the Climate Leadership
Implementation Act, creating a carbon levy on fuel
consumption. This legislation marks the provincial government's
first step towards executing its Climate Leadership Plan.
Additional legislation, still pending, is aimed at eliminating
emissions from coal-fired electricity generation, capping oil sands
emissions and reducing methane emissions.
When the legislation is officially proclaimed, all fuel
consumption—including gasoline and natural gas—will be
subject to a carbon levy to be effected through a series of payment
and remittance obligations throughout the fuel supply chain.
Commencing on January 1, 2017, consumers of fuel will pay levies at
rates based on CA$20 per ton of carbon (e.g., 4.49 cents/liter for
gasoline), with the carbon price increasing to CA$30 per ton on
January 1, 2018 (6.73 cents/liter). The carbon levy has certain
exemptions, including fuel used in the operation of a specified gas
emitter and fuel used in farming operations. The legislation
creates mechanisms for the assessment of the levy and the
enforcement of payment, while providing that corporate directors
can be held jointly or severally liable for payment if their
corporation fails to remit the required carbon levy.
The revenue generated from the carbon levy will be applied to
provincial climate change initiatives, while also producing rebates
for qualified individuals and businesses. According to initial
government estimates, more than 60 percent of Albertans will be
eligible for full or partial rebates.
Amendments to the Corporate Tax Act will reduce the
small business tax rate from three percent to two percent in order
to help businesses adapt to the carbon levy, while amendments to
the Alberta Personal Income Tax Act will provide for the
eligibility and calculation methods pertaining to the Alberta
Climate Leadership Adjustment Rebate. Finally, amendments to the
Climate Change and Emissions Management Act broaden the
accepted use and purpose of the Climate Change and Emissions
Management Fund to encompass education initiatives and outreach
On June 8, 2016, the government of Ontario officially announced
its five-year Climate Action Plan, which had been leaked to the
media in late May. The plan includes 28 key measures aimed at
reducing the province's greenhouse gas emissions and
transitioning to a low-carbon economy. It follows on the passage in
May of the Climate Change Mitigation and Low-Carbon Economy
Act and accompanying regulations. The legislation provided the
foundation for Ontario's cap-and-trade regime, setting out the
mechanics of how this system will work and how GHG emissions will
be quantified, reported and verified. It establishes emission
reduction targets, imposes reporting requirements, creates
categories of participants, authorizes the creation and
distribution of allowances and the creation of offset credits and
establishes enforcement mechanisms. The legislation also authorizes
linkage of Ontario's cap-and-trade regime with
"corresponding programs" in "other
jurisdictions", such as California and Quebec.
The Climate Action Plan predicts the province will spend up to
CA$8.3 billion on a variety of programs, some of which are designed
to encourage conversion to more energy-efficient heating systems,
the purchase of electric/hybrid vehicles, conversion of large
vehicles to natural gas and maximization of carbon storage from
agriculture. Funds for these programs are expected to come from the
CA$1.8 billion to CA$1.9 billion annual revenue the province
predicts will be generated from the cap-and-trade program. The plan
also calls for the creation of a "green bank" to deploy
and finance readily available low-carbon technologies to reduce
emissions from Ontario buildings.
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