Manitoba carbon tax will hit drivers but many big emitters will be exempt

Average Manitobans will pay an extra $125 per year at the pumps when the carbon tax takes effect on Sept. 1, the Progressive Conservatives' 2018-19 spending plan says.

$25-per-tonne carbon tax will take effect Sept. 1, driving up gas prices by 5.32 cents/litre

Effective Sept. 2, gasoline will cost 5.32 cents more per litre and diesel will cost 6.71 cents more per litre. (Getty Images/RooM RF)

Average Manitobans will pay an extra $125 per year at the pumps when the carbon tax takes effect on Sept. 1, the Progressive Conservatives' 2018-19 spending plan says.

Big emitters and agricultural producers will see exemptions, but the carbon tax will increase the cost of home heating and transportation fuel when it takes effect this fall, the provincial budget says.

Finance Minister Cameron Friesen tabled his third budget Monday, filling in a little more detail about its Made-in-Manitoba Climate and Green Plan.

The plan was introduced in October 2017 and includes a $25-per-tonne carbon tax for the next four years.

Effective Sept. 1, various fuels will see different price hikes under the tax, based on how much greenhouse gas they emit. The budget pins these at:

  • Gasoline – 5.32 cents/litre.
  • Diesel – 6.71 cents/litre.
  • Natural gas – 4.74 cents/cubic metre.
  • Propane – 3.87 cents/litre.

The budget estimates that will translate to an extra $115 more per year for natural gas for the average household, and an additional $125 for gas.

For the government, the tax will yield a net revenue of $143 million in the 2018-19 fiscal year, the budget says. A full 12-month period following implementation will yield a net revenue of $248 million, and most of that will come from space heating and transportation fuels, the budget says.

The budget makes a clear promise to return all that revenue to Manitobans over the next four years through tax reductions – that is, the increased basic personal amount, small business tax reductions and a drop to the provincial sales tax coming in 2020.

The bill to legislate the carbon tax still hasn't been introduced, but the budget says that will happen this spring.

Who's saving

Some industries will benefit from exemptions to the tax "to protect Manitoba sectors and industries that are trade exposed" to jurisdictions without carbon taxes, the budget says.

All agricultural process-related emissions are exempt from the tax, for instance, and all marked fuels or "purple fuels." About 90 per cent of marked fuels are used in the agriculture sector and the rest is used by fishing, forestry, mining and other sectors.

Roughly a dozen companies that produce more than 50,000 tonnes of carbon per year — including big players like Koch Fertilizer in Brandon and the Vale smelting plant in Thompson — will get exemptions for production emissions until 2019, the document says.

Starting that year, those companies will be subject to a cap-and-trade-like system. Smaller emitters facing U.S. competition can also apply to participate, but need government approval.

Progressive Conservative projections say the plan will reduce emissions by .08 megatonnes more than the federal version, which would bring in a rising tax that would hit $50-per-tonne in five years — a reduction of 1.07 megatonnes by 2022, instead of the 0.99 megatonnes it says the federal plan would achieve.

Adding in other envisioned "complementary climate actions" under the Made-in-Manitoba plan, including heavy-duty truck retrofits, electric bus conversion and a "low-carbon government," the Tories say the strategy will reduce carbon emissions by 2.46 megatonnes by 2022.

Green spending

The budget also gives the broad strokes of planned green initiatives. The biggest price tag is a one-time endowment of $102 million to create a new conservation trust to support climate strategy objectives, especially those related to conserving ecosystems and water quality, through matched funding.

The trust will be managed by the Winnipeg Foundation and proceeds will be administered by the Manitoba Habitat Heritage Corp. Its funds will be available to public and private groups, including municipalities, non-governmental organizations and universities.

The budget also promises $40 million for green projects, carrying over $34 million from the last budget and adding just under $6 million in new money.

It's not clear how that money will be spent, but the budget says it's earmarked for "green projects," including "green infrastructure to adapt to climate change, green technology to reduce greenhouse-gas emissions, and transition to a low-carbon economy," as well as support for "green best practices."

With files from Kristin Annable, Bartley Kives and Sean Kavanagh