Liberals provide details of plan for national carbon tax

The federal government has released a discussion paper on how it plans to impose a national carbon tax that would ensure a carbon price of at least 11 cents a litre on gasoline by 2022 but will include flexibility for provinces working towards their own plans.

Proposed federal rules will only apply in provinces without their own carbon tax

The federal government will outline Thursday how it plans to implement a federal carbon tax on those provinces that do not put their own carbon pricing plan in place by 2019. Sources say the tax will be modeled on Alberta's. (Mark Ralston/AFP/Getty Images)

The federal government has released details of how it plans to put a "price on pollution" that would ensure a carbon price of at least 11 cents a litre on gasoline in all provinces by 2022 but will include flexibility for provinces working towards their own plans.

The plan is intended to ensure all provinces put a price on carbon starting next year, and details how the federal government would impose that price in provinces that don't do it themselves.

Environment Minister Catherine McKenna, speaking to reporters on Parliament Hill, said "every penny" collected by the federal government would be returned to the provinces and territories. She said putting a price on pollution is critical to tackling climate change and stirring innovation in clean energy.

"Our plan is fair, it is credible," she said. "Making sure there is a price on pollution across the country is fair for all Canadians."

Asked if the plan would withstand a legal challenge from a province, as Saskatchewan has threatened, McKenna said the federal government is acting within its authority. 

"It is well within the government's right to take action to protect the environment," she said.

But Saskatchewan Premier Brad Wall responded swiftly, calling today's announcement "more like a ransom note." He said the province would be taking the federal government to court.

The 26-page document released today outlines in detail how a federal carbon tax would be implemented, including how the levy would be applied to fossil fuels, such as gasoline, diesel and natural gas, starting in 2018.

Ottawa has set a starting price of $10 a tonne on carbon dioxide emissions in 2018, increasing to $50 a tonne by 2022.

So, for example, a tax of $10 a tonne on gasoline would require an extra 2.33 cents per litre added at the pumps. That rises to 11.63 cents per litre by 2022. Some provinces already have a carbon tax on gasoline that meets the federal requirement.

The levy on emissions from industrial facilities will not start before Jan. 2, 2019, and will only apply to facilities that emit more than 50 kilotonnes or more of greenhouse gases per year.

Under a deal reached last December, the federal government and most provinces agreed to put some kind of price on carbon by next year — but the federal government has said it would impose one in 2019 for those provinces that failed or refused to do so.

There is some flexibility on the timing of that plan. If, for example, a province was on the verge of approving its own carbon tax legislation, the federal plan would not be imposed Jan. 1, 2019.

Provinces that already have a carbon tax, such as British Columbia and Alberta, or plan to impose a carbon price through a cap and trade system, such as Ontario, Quebec and Nova Scotia, will not be affected.

Prime Minister Justin Trudeau, left, and the premiers reached agreement on a pan-Canadian climate framework in December, though Saskatchewan Premier Brad Wall and Manitoba's Brian Pallister did not sign the agreement. (Sean Kilpatrick/Canadian Press)

Saskatchewan opposed

So far, five provinces already have a price on carbon.

Four others have promised to bring one in, though they are at different stages of coming up with plans. Those include Manitoba, New Brunswick, Prince Edward Island and Newfoundland and Labrador.

Only Saskatchewan has steadfastly refused to bring in a carbon tax.

The federal government has promised that any money raised from a federal carbon tax would be returned to the province in which it was raised.

Thursday's discussion paper does not offer suggestions for how that funding could flow, but simply states: "the federal government is open to feedback on the best mechanism to achieve this."

Provinces must have a carbon pricing system in place in order to tap into various green pots of money announced in the last two federal budgets.

Ottawa and most of the provinces and territories reached a framework deal last December on cutting greenhouse gasses to meet Canada's Paris Climate Accord commitments. The possibility of a federal carbon tax for provinces that didn't implement their own plan was part of that agreement.

The federal Liberals were under pressure to have a plan to lower greenhouse gas emissions before it approved more pipelines to carry crude to market.

Prime Minister Justin Trudeau campaigned on the dual promise of protecting the environment and developing energy resources at the same time, saying often that improving the economy and the environment go hand in hand.

Stakeholders, business and the public have until June 30, 2017 to submit their feedback on the federal government's carbon tax plan.

NDP Leader Tom Mulcair said his party has always supported a price on carbon, but he accused the government of failing to have a comprehensive plan to reduce greenhouse gas emissions.

"They're playing a bit of a shell game here on the Liberal side," he said.