In this section, you will learn about the following topics involved in putting a price on carbon:
- Why price carbon pollution?
- Cap & Trade system
- Carbon tax
- Revenue recycling
Click a topic to jump to a page with details.
Both methods generate revenue that can then be recycled to enable us to change our behaviour, technology, systems, and infrastructure so that we emit less greenhouse gases (GHG) every day.
In order to avoid leakage, carbon pricing needs to be applied as universally as possible. The federal Pan-Canadian Framework on Clean Growth and Climate Change set the price at $10 / tonne starting in 2018 and rising to $50 / tonne in 2022. Provinces who have chosen not to impose a price on carbon are subject to the “federal backstop” in this plan. The price rises on April 1 each year.
In October 2017, the Manitoba government announced their Made-in-Manitoba Climate and Green Plan. This plan was to include a price on carbon pollution of $25 / tonne right away and remain constant for 5-years. However, this was never implemented.
Since Manitoba is not collecting carbon revenue, it does not have access to funds that could be recycled in programs that would help us move away from fossil fuel dependence. Instead, the Canadian federal government is collecting the carbon tax and returning most of that revenue from Manitobans back to Manitobans. This “dividend” is returned as a Climate Action Incentive (CAI) payment.
Initially, the Climate Action Incentive was a single payment at income tax time. Starting in July 2022 Manitobans automatically receive CAI payments four times a year.
In 2022-23, the CAI payments mean a family of four in Manitoba will receive $832 for the year. Families in rural and small communities are eligible to receive an extra 10 per cent.
The following table shows the impact various carbon prices would have on the price of fossil fuels that Manitobans typically buy.
To put this in perspective, each $10/tonne that the carbon tax is raised will increase the cost of a 50 litre gasoline fill-up by $1.16. And currently, most of those payments are returned in Climate Action Incentive payments. (If gasoline is $1.50/litre, a 50 litre fill-up costs $75)
|Year||Cost per tonne CO2e||Additional cost per litre gasoline||Additional cost per litre diesel fuel||Additional cost per m3 natural gas|
|2018-19||$10||2.33 ¢/L||2.74 ¢/L||1.96 ¢/m3|
|2019-20||$20||4.65 ¢/L||5.48 ¢/L||3.91 ¢/m3|
|$25||5.83 ¢/L||6.85 ¢/L||4.90 ¢/m3|
|2020-21||$30||6.98 ¢/L||8.21 ¢/L||5.87 ¢/m3|
|2021-22||$40||9.30 ¢/L||10.95 ¢/L||7.83 ¢/m3|
|2022-23||$50||11.63 ¢/L||13.69 ¢/L||9.79 ¢/m3|
|$100||23.3 ¢/L||27.4 ¢/L||19.6 ¢/m3|
|$200||46.6 ¢/L||54.8 ¢/L||39.2 ¢/m3|