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 a requirement for provinces to put a price on carbon or show programs that will reduce emissions to the same extent as a direct carbon price would.
Provinces who have chosen not to impose a price on carbon are subject to a “federal backstop”. This means the federal government will collect the carbon levy and return a dividend directly to households thereby bypassing the provincial government.
Manitoba is subject to this “federal backstop”. This set a price at $10 / tonne starting in 2018 and rose by $10 each year to $50 / tonne in 2022. Starting in 2023, the rate will increase by $15 per tonne per year until 2030. The price rises on April 1 each year.
The table below shows how various carbon taxes will be reflected in fuel prices. (1)
|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|
|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|
|2023-24||$65||14.31 ¢/L||17.38 ¢/L||12.39 ¢/m3|
|2024-25||$80||17.61 ¢/L||21.39 ¢/L||15.25 ¢/m3|
|2025-26||$95||20.91 ¢/L||25.40 ¢/L||18.11 ¢/m3|
|2026-27||$110||24.22 ¢/L||29.41 ¢/L||20.97 ¢/m3|
|2027-28||$125||27.52 ¢/L||33.42 ¢/L||23.83 ¢/m3|
|2028-29||$140||30.82 ¢/L||37.43 ¢/L||26.69 ¢/m3|
|2029-30||$155||34.12 ¢/L||41.44 ¢/L||29.94 ¢/m3|
|2030-31||$170||37.43 ¢/L||45.45 ¢/L||32.40 ¢/m3|
To put this in perspective, at $65 / tonne, the carbon tax portion of a 50 litre fill-up is about $7.58. And currently, most of those payments are returned in Climate Action Incentive rebate payments.
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 federal government collects the carbon tax and returns most of that revenue from Manitobans back to Manitobans. This rebate 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 $1,056 for the year. Families in rural and small communities are eligible to receive an extra 10 per cent.