Sunday, January 1, 2017

-Carbon Levy Starting January 1, a carbon levy will be charged on all fuels that emit greenhouse gas emissions when combusted at a rate of $20/tonne in 2017 and $30/tonne in 2018. The rate is based on the amount of carbon pollution released by the fuel when it's combusted, not on the mass of fuel itself. These include transportation and heating fuels such as diesel, gasoline, natural gas and propane. Certain fuels, such as marked gas and diesel used on farms, will be exempt from the levy. The levy doesn't apply to electricity.------------Julie Ali I don't think the carbon tax is anything other than a way for the GOA to generate tax dollars. It is greenwashing and it won't work.We also have to pay for a new layer of bureaucrats in place to return this tax money to some citizens so this is like a green GST. I believe this tax was implemented by the NDP folks to get the pipelines approved by the federal government. It's incomprehensible to me that we have Andrew Leach, an academic and the NDP folks produce a policy that impacts every single citizen in Alberta without cost benefit analysis work being provided to the public. All we get on the GOA site is potential returns in the billions and generic transfers of the money. Not acceptable. https://www.alberta.ca/climate-carbon-pricing.aspx The carbon levy is the key tool that will pay for the transition to a more diversified economy. Over the next 5 years, the levy is expected to raise $9.6 billion, all of which will be reinvested in the economy and rebated to Albertans. $6.2 billion will help diversify our energy industry and create new jobs: $3.4 billion for large scale renewable energy, bioenergy and technology $2.2 billion for green infrastructure like public transit $645 million for Energy Efficiency Alberta, a new provincial agency that will support energy efficiency programs and services for homes and businesses $3.4 billion will help households, businesses and communities adjust to the carbon levy: $2.3 billion for carbon rebates to help low- and middle-income families $865 million to pay for a cut in the small business tax rate from 3% to 2% $195 million to assist coal communities, Indigenous communities and others transition to a cleaner economy« less


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Julie Ali
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A green GST that won't reduce carbon emissions but will provide more money to the GOA to continue it's poor economic progress. It's important for the GOA to reduce its costs, provide deliverables and yes ensure that the cost benefit analysis work drives policy making. As it stands, it feels for this citizen that we have an economist (Andrew Leach) and a crew of raw recruits (NDP hires) running a government that is far too bulky, too expensive and without any sort of decent performance. I also don't recall this tax being on the agenda of the NDP folks; when I voted for the NDP I did not vote for increased costs to everything for my family.
What does Alberta's carbon levy mean for households, the oil and gas industry and the global fight against climate change? Here's what Andrew Leach, who came up with the plan, thinks.
CBC.CA
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https://www.alberta.ca/climate-carbon-pricing.aspx

Carbon levy and rebates

Putting a price on carbon is the most cost-effective way to reduce greenhouse gas emissions that cause climate change.

On this page

Alberta’s carbon levy provides a financial incentive for families, businesses and communities to lower their emissions. Economists agree that a price on carbon is the most cost-effective way to reduce emissions. It drives innovation and changes behavior by encouraging individuals and businesses to become more energy efficient and shift away from higher emission fuels.
The levy will also help diversify our energy industry and create new jobs, and is already improving access to new markets and better prices for our traditional energy products.
Carbon rebates will offset costs associated with the levy to help low-and middle-income households adjust. To help businesses, the small business tax rate is being cut by one third.
Together with the new performance standards for large industrial emitters, the carbon pricing model covers 78-90% of Alberta’s emissions.

Carbon Levy

Starting January 1, a carbon levy will be charged on all fuels that emit greenhouse gas emissions when combusted at a rate of $20/tonne in 2017 and $30/tonne in 2018. The rate is based on the amount of carbon pollution released by the fuel when it's combusted, not on the mass of fuel itself.
These include transportation and heating fuels such as diesel, gasoline, natural gas and propane. Certain fuels, such as marked gas and diesel used on farms, will be exempt from the levy.
The levy doesn't apply to electricity.
All revenue from the levy will be reinvested back into Alberta to grow and diversify our economy as we reduce carbon pollution.
With no provincial sales tax, payroll tax or health care premiums, Albertans across all income ranges generally pay the lowest overall taxes compared to other provinces. When all tax measures and carbon charges are considered, Alberta’s tax advantage is at least $7.5 billion
Table 1. Carbon levy on major fuels
Type of Fuel
January 1, 2017
$20/tonne
January 1, 2018
$30/tonne
Marked farm fuels
Exempt
Exempt
Diesel
+5.35 ¢/L
+2.68 ¢/L
Gasoline
+4.49 ¢/L
+2.24 ¢/L
Natural Gas
+1.011 $/GJ
+0.506 $/GJ
Propane
+3.08 ¢/L
+1.54 ¢/L

Impact on households

Impacts of the carbon levy will vary, depending on a household’s energy use and driving patterns.
All Albertans who take steps to reduce their emissions – by turning down the heat when no one is home, installing smart thermostats, choosing more fuel efficient cars, using public transit, walking, biking, or taking advantage of coming energy efficiency programs – can reduce the cost of the carbon levy.
Six of 10 Alberta households will receive a rebate that covers the average cost of the carbon levy.
Table 2. Estimated direct costs of the carbon levy on a household per year.

Single
Couple
Couple with 2 children
Typical fuel use assumptions
Natural gas use (GJ)
100
123
135
Gasoline use (L)
2,000
3,000
4,500
2017 costs and rebates
Natural gas cost
$101
$124
$136
Gasoline cost
$90
$135
$202
Total levy cost
$191
$259
$338
Full rebate
$200
$300
$360
2018 costs and rebates
Natural gas cost
$152
$186
$205
Gasoline cost
$134
$202
$303
Total levy cost
$286
$388
$508
Full rebate
$300
$450
$540

Estimated indirect cost on households

In addition to direct costs, there will be indirect costs from the carbon levy in the form of higher prices for other goods and services. However, the impact is expected to be relatively small since a large portion of commodities bought by Alberta households are imported from outside the province. Imported commodities are not subject to the levy, although the distribution and retailing of those goods will face some carbon levy related charges.
The indirect costs of the carbon levy are estimated to range between:
  • $50 to $70 per household in 2017
  • $70 to $105 per household in 2018
Indirect costs of the carbon levy on Alberta households were calculated using a detailed Alberta Input-Output model, which is based on Statistics Canada data and reflects inter-industry as well as cross-border trade flows that occur while producing a specific good or service consumed by Alberta households. To develop the ranges, it is assumed that businesses subject to the levy pass through 50% to 75% of the related costs to consumers.

Carbon rebates

Rebates will be provided to lower- and middle-income Albertans to offset costs associated with the carbon levy. The rebates protect those who spend a higher percentage of their income on energy costs and have fewer financial resources to invest in energy efficiency products.
60% of households will get a full rebate: $200 for an adult, $100 for a spouse and $30 for each child under 18 (up to four children). Single parents can claim the spouse amount for one child, and the child amount for up to 4 more children.
Full rebates will be provided to single Albertans who earn $47,500 or less, and couples and families who earn $95,000 or less. An additional 6% of households will receive a partial rebate.

Eligibility

The rebate is solely tied to income and not energy use, so eligible recipients have a financial incentive to reduce household emissions.
You don't need to apply. You'll automatically receive a rebate if you file a tax return and meet the income criteria. You're not required to answer questions over the phone or give access to your home to determine eligibility.

Payments

Payments will be mailed or direct deposited according to the amount you’re eligible to receive:
  • $400 or more delivered in 4 payments (Jan, Apr, Jul, Oct)
  • $200-$399 delivered in 2 payments (Jan, Jul)
  • $100-$199 delivered in 1 payment (Jan)
For questions about the rebate, please contact the Canada Revenue Agency (CRA), as CRA is administering the program on the province's behalf: 1-800-959-2809.
Table 3. Rebate income parameters

2017
2018
Rebate amounts
First adult
$200
$300
Spouse/Equivalent to spouse
$100
$150
Each child (maximum 4)
$30
$45
Maximum income to receive full rebate
(Family Net Income)
Single
$47,500
$47,500
Couple
$95,000
$95,000
Families
$95,000
$95,000
Maximum income to receive partial rebate
(Family Net Income)
Single
$51,250
$55,000
Couple
$100,000
$103,750
Couple with 1 child
$100,750
$104,875
Couple with 2 children
$101,500
$106,000
Couple with 3 children
$102,250
$107,125
Couple with 4 children
$103,000
$108,250

Reinvesting in our economy

The carbon levy is the key tool that will pay for the transition to a more diversified economy. Over the next 5 years, the levy is expected to raise $9.6 billion, all of which will be reinvested in the economy and rebated to Albertans.
$6.2 billion will help diversify our energy industry and create new jobs:
  • $3.4 billion for large scale renewable energy, bioenergy and technology
  • $2.2 billion for green infrastructure like public transit
  • $645 million for Energy Efficiency Alberta, a new provincial agency that will support energy efficiency programs and services for homes and businesses
$3.4 billion will help households, businesses and communities adjust to the carbon levy:
  • $2.3 billion for carbon rebates to help low- and middle-income families
  • $865 million to pay for a cut in the small business tax rate from 3% to 2%
  • $195 million to assist coal communities, Indigenous communities and others transition to a cleaner economy

Support for businesses

Small business tax cut

To help businesses adjust to the carbon levy, Alberta’s small business corporate income tax rate is being reduced by one third, from 3% to 2% effective Jan 1, 2017. The reduction is projected to save small business owners $185 million in 2017-18.
With the tax relief, Alberta is now tied with Saskatchewan for the second-lowest provincial small business tax rate. While Manitoba has a lower rate, Alberta small business owners pay lower taxes when they take money out of their business for personal use. Alberta maintains the lowest overall tax regime in Canada, with no provincial sales tax, health premium or payroll tax.
For more information about government support for small businesses, please visit Alberta Jobs Plan.

Administering the carbon levy

Registration forms, guides and instructional videos are now available for businesses that are responsible for remitting the carbon levy, such as retailers of fuels.
Businesses that sell certain fuels – such as gasoline, diesel, propane, kerosene, butane and more – may need to complete a carbon levy inventory declaration.
For more information, visit Alberta’s Tax and Revenue Administration website.

Support for farmers

Farm fuel exemption

Marked farm fuels are exempt from the carbon levy. This means that the carbon levy does not apply to dyed diesel or gasoline used in farming operations. Agriculture is the only economic sector with a levy exemption.
The farm fuel carbon levy exemption uses the same eligibility criteria as the Alberta Farm Fuel Benefit (AFFB) fuel tax exemption. The AFFB program registration number will also be used for the carbon levy exemption certificate.

Energy efficiency programs for farms

Through the Climate Leadership Plan, the government is investing $10 million to help farm operations reduce their emissions and save on energy bills through efficiency upgrades. The programs include:
  • On-Farm Energy Management Program assists producers with the purchase of equipment that improves energy efficiency or monitors energy consumption. This includes lighting, pumps, meters, boilers, heaters and low-energy, livestock-watering fountains.
  • On-Farm Solar PV Program assists producers with the purchase of grid-connected solar panel systems that can be used to generate electricity and reduce emissions on farms.
  • Irrigation Efficiency Program helps producers invest in new or upgraded low-pressure irrigation equipment, improving water efficiency and reducing energy use.
    • Facilitates collaboration between agricultural societies, industry organizations and producer groups to collaborate through proof-of-concept and commercialization of new products, new processes or new business practices in Alberta.
    • Assists primary producers, agri-processors and other for-profit companies with the early adoption of new technologies or practices that have the potential for sector-wide impact.

Carbon levy exemptions

In addition to marked farm fuel, some other fuels are exempt from the carbon levy, including the following:
  • purchases of fuel on-reserve or at other prescribed locations by eligible First Nations and individuals for personal and business use
  • marked gasoline and diesel used by farmers in farming operations
  • biofuels, including biomethane, biodiesel and ethanol
  • inter-jurisdictional flights
  • fuel sold for export
  • industrial exemptions in cases where fuel is used in industrial processes but not combusted
  • natural gas produced and consumed on site by conventional oil and gas producers (until Jan 1, 2023)
  • the use of heating fuels on sites subject to the Specified Gas Emitters Regulations (SGER)/output-based allocation regime
For a full list of carbon levy exemptions, see pages 94-96 of the 2016-19 Fiscal Plan (3.0 MB)

Large industrial emitters

Large Industrial Emitters will continue to be subject to the SGER framework until the end of 2017, when the province will transition to an output-based allocation approach. Further details will be available after stakeholder engagement.
The new framework, which is endorsed by energy leaders, is designed to reduce the amount of carbon pollution in every barrel of oil.
Under SGER, facilities that emit 100,000 tonnes or more of greenhouse gas emissions are required to annually reduce their site-specific emissions intensity by 20% as of Jan 1, 2017.
There are 4 ways facilities can comply:
  • make improvements at their facility to reduce emissions
  • use emission performance credits generated at facilities that achieve more than the required reductions
  • purchase Alberta-based carbon offset credits
  • contribute to Alberta’s Climate Change and Emissions Management Fund (Fund)
Facilities that contribute to the Fund pay $20 for every tonne over their reduction target. The price changes to $30 as of Jan 1, 2017.
On-site combustion in conventional oil and gas will be levied starting Jan 1, 2023 while that sector works to reduce methane under the government’s new joint initiative on methane reduction and verification.

CBC Q&A: Climate plan architect Andrew Leach talks carbon tax

'We’re not saying shut down Alberta’s economy to solve climate change'

By Paul Haavardsrud, CBC News Posted: Dec 31, 2016 7:00 AM ET Last Updated: Dec 31, 2016 7:00 AM ET
University of Alberta economist Andrew Leach and Alberta Environment Minister Shannon Phillips discuss the province's climate change plans.
University of Alberta economist Andrew Leach and Alberta Environment Minister Shannon Phillips discuss the province's climate change plans. (Terry Reith/CBC)
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Paul Haavardsrud
Paul Haavardsrud writes for CBC's western business desk in Calgary. He is also a producer on CBC Radio’s national business desk where he talks about business on Radio One in the afternoons. Prior to that he worked for newspapers. On Twitter, he’s @paulhaavardsrud.

Related Stories

Where does Alberta's carbon tax, which takes effect this week, fit in the global fight against climate change, and what will it mean for households and the oil and gas industry?
Andrew Leach, an economist at the University of Alberta and the architect of the province's climate change plan spoke with the CBC about some of the common questions that Albertans have about the carbon tax.
Here are edited excerpts from the interview:
Let's start at the beginning; what's the point of a carbon tax?
The goal is to shift relative prices so that people move to lower-emissions lifestyles and activities … and it's to put that decision-making power in the hands of individuals as opposed to in the hands of government regulation.
So what kind of decisions are we talking about?
We tend to focus on the really visible, outward, flashy things — the electric cars, the solar panels, these types of things — but a lot of the time where the biggest gains are for individuals, and for greenhouse gas emissions, are in the simple boring stuff, weather stripping around doors, insulation in attics, windows, things that don't make a huge visible imprint … but really do have a massive bang for the buck.
What will this mean for household budgets?
This isn't a policy where we're all of a sudden making the use of fossil fuel-based energy, whether for transportation or for home heating, prohibitively expensive.
Where for an individual replacing their furnace previously, it may not have made sense for them to put in a high-efficiency furnace, maybe now it makes sense for them to put in a high-efficiency furnace as opposed to a standard furnace. For an individual looking at new windows, maybe it makes sense to go from a double-pane window to a triple-pane window or it makes sense to pay a little bit more for the gas treatment within the panes to increase their energy efficiency a little bit. It just changes those tradeoffs at the margin.
Which households will be better and worse off?
It makes higher-emissions lifestyles more expensive, it makes lower-emissions lifestyles less expensive, it has credits that are more generous — in relative terms — at the lowest income [levels], but … within those income brackets, you're talking about someone earning less than $20,000 a year who might end up $200 a year better off than they would otherwise be, where someone earning $140,000 a year might end up a few hundred dollars worse off than they would otherwise be.
Banff solar panal
Solar panels are a flashy option to reduce household emissions, but more mundane choices like weather stripping around doors can make a meaningful difference to energy efficiency, Leach says. (CBC)
The energy industry, as we know, competes for investment globally with money flowing to the most attractive places. Will a carbon tax make Alberta's industry less competitive?
It's certainly a valid concern … our policy makes low-cost resource developments and low-energy input resource developments cheaper than they would have otherwise been. The ones that it makes more expensive are the ones with really, really high greenhouse gas emissions
Yes, there are potentially some different cost structures that come in from carbon emissions policies, but there's also a big swing in the operating environment that's come about as a result of the royalty framework. Let's look at the whole thing, let's not just say "all else equal what about this carbon policy?" Let's remember these two frameworks were developed simultaneously.
The New York Times recently quoted you as saying the carbon tax was a "rounding error" for producers. It's a sentiment that didn't sit well with some in the industry, who say it's evidence the new policy is out of touch with the competitive realities on the ground.
If you look at the average cost [of the carbon tax] on a top quartile oilsands facility, it's 20 cents a barrel. Relative to the uncertainties around oil prices, that's not a material change in the economics of an oilsands facility.
And so where that quote came from was me saying relative to the potential swings in oil prices … the potential impact of carbon pricing is a rounding error. These are changes that matter, but they're just not as big as the uncertainty we have right now over the oil price. Taken in context, I think people would be happier with that quote.
What would you say to Albertans who would rather wait and see what the rest of the world does on climate change before putting a price on carbon? They wouldn't mind taking some type of action, but worry about what this will mean for the economy.
We're not saying shut down Alberta's economy to solve climate change.
What do we know about climate change? We know it's a global collective action problem and so it would be very easy for all of the jurisdictions in the world to divide themselves into small enough parts to say they don't matter.
The problem is one of adding up all of those jurisdictions. It doesn't actually change the problem if we divide everybody up into small pieces and say nobody matters. Is Canada or is Alberta, in and of itself, going to stop the problem of climate change? Absolutely not, but no one's ever said it would.
That would seem to speak to the idea that Canada is only responsible for 1.6 per cent of global emissions, a point raised by critics who regard domestic efforts to fight climate change as futile. In that context, does it really matter what Canada does?
There are a lot of things we do [even though] we're small. Every individual Albertan isn't going to make a difference when it comes foreign aid. We're not a large part of the response to the global refugee crisis, but that doesn't mean that what we're doing doesn't matter.
2015 photos of the year Beijing red alert smog Nov 30
The argument that countries like China aren't taking steps to tackle emissions, Leach says, is a red herring. (Kevin Frayer/Getty)
What about China and the U.S.? What they're doing or, perhaps, not doing often comes up in this same discussion.   
The red herring that other countries are not acting has been bandied around, but I think people should have a look at the rapidity of solar and renewables deployment in China.
The world is moving on this problem for a variety of reasons, and I think Alberta should be part of it.
China's large, there's no getting around the fact that on most of these files, China's going to have a key role in determining the trajectory for the world. Let's look at China's problem compared to Alberta's. China is resource poor in alternatives to coal. Their access to natural gas and other alternatives is far more expensive, but we as Alberta are going to turn around to them and say, "You guys should really get off coal." Now, we're not prepared to do it, despite the fact that we have a vast reliable local source of natural gas and we have higher disposable incomes, but we think you should do it and we'll do it when you do. That's a pretty hard case to make.
Is Canada really enough of a global player to take on this kind of leadership role?
I would think in a lot of other fields, people would have a very different impression. When you get thinking about things like our NATO presence, we're a very small percentage of a vast majority of NATO efforts … we're a small portion of global foreign aid, refugee crisis, you can list them all. We're always going to be small, because we're a small portion of the global population.
Saying all that, some still believe Alberta should stay on the sidelines. If you were trying to convince them otherwise, what might you say?
The motivation to act upon this from Alberta's perspective is, in part, an economic self-interest. We're not facing the choice between action or inaction. We're facing the choice of action that we set the agenda for or action imposed on us by others.


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Julie Ali
  • Julie Ali
I don't think the carbon tax is anything other than a way for the GOA to generate tax dollars. 

It is greenwashing and it won't work.We also have to pay for a new layer of bureaucrats in place to return this tax money to some citizens so this is like a green GST. 

I believe this tax was implemented by the NDP folks to get the pipelines approved by the federal government. 

It's incomprehensible to me that we have Andrew Leach, an academic and the NDP folks produce a policy that impacts every single citizen in Alberta without cost benefit analysis work being provided to the public. All we get on the GOA site is potential returns in the billions and generic transfers of the money. Not acceptable. 

https://www.alberta.ca/climate-carbon-pricing.aspx 
The carbon levy is the key tool that will pay for the transition to a more diversified economy. Over the next 5 years, the levy is expected to raise $9.6 billion, all of which will be reinvested in the economy and rebated to Albertans. 
$6.2 billion will help diversify our energy industry and create new jobs: 

$3.4 billion for large scale renewable energy, bioenergy and technology 
$2.2 billion for green infrastructure like public transit 
$645 million for Energy Efficiency Alberta, a new provincial agency that will support energy efficiency programs and services for homes and businesses 
$3.4 billion will help households, businesses and communities adjust to the carbon levy: 

$2.3 billion for carbon rebates to help low- and middle-income families 
$865 million to pay for a cut in the small business tax rate from 3% to 2% 
$195 million to assist coal communities, Indigenous communities and others transition to a cleaner economy« less


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