There are basically two ways to put a more appropriate price on carbon: carbon tax or by implementing a cap and trade system.
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.
A carbon tax has the consumer of a fossil fuel pay tax to the government. The rate of that tax for each fuel is calculated based on the GHG emissions released by the burning of that fuel.
Key advantages of a carbon tax as compared to cap and trade include these aspects:
- easy for consumers to see and to understand
- easier and quicker for governments to implement
- relatively low administrative overhead
On October 27, 2017 the Manitoba government announced their Made-in-Manitoba Climate and Green Plan. This plan includes a price on carbon pollution of $25 / tonne right away and remaining constant for 5-years.
This differs from the federal government‘s Pan-Canadian Framework on Clean Growth and Climate Change. The federal plan sets the price at $10 / tonne in 2018 and rises $10 / tonne each year until it reaches $50 / tonne by 2022.
The Canadian government has also proposed a Federal Carbon Pricing Backstop. Any province that doesn’t impose a price equivalent to the Pan-Canadian framework would see the federal government impose the tax on their behalf. Revenue collected would be returned to the province in which it was collected.
The following table shows the impact various carbon prices would have on the price of fossil fuels that Manitobans typically buy.
|Cost per tonne CO2e||Additional cost per litre gasoline||Additional cost per litre diesel fuel||Additional cost per m3 natural gas|
|$10||2.33 ¢/L||2.74 ¢/L||1.96 ¢/m3|
|$20||4.65 ¢/L||5.48 ¢/L||3.91 ¢/m3|
|$25||5.83 ¢/L||6.85 ¢/L||4.90 ¢/m3|
|$30||6.98 ¢/L||8.21 ¢/L||5.87 ¢/m3|
|$40||9.30 ¢/L||10.95 ¢/L||7.83 ¢/m3|
|$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|