Federal Carbon Price Rebates to Rising More Than Expected in Ontario, Manitoba

The federal government’s carbon price rebate is set to rise more than expected in Ontario and Manitoba, with some families receiving as much as $2,000 a year.

The rebates are part of the government’s plan to price carbon emissions at $20 per tonne starting next year and will incrementally increase until 2022. 

To make up for too-small rebates the previous two years, the value of federal carbon-price rebate cheques will increase by more than 66% in Ontario and Manitoba this year.

The payments will be made quarterly for the first time, rather than as a flat sum in annual tax-return deposits. Supporters of a carbon tax argue that this will make money more visible to Canadians.

“Astonishingly, more Canadians aren’t aware of the climate rebates,” said Stewart Elgie, the University of Ottawa’s Environment Institute director.

“However, I believe that once individuals start receiving actual payments every three months, it will become much more obvious, and people will become a lot more aware that they are getting money back, and in most cases, they are getting more money back than they are paying.”

According to the second annual report on federal carbon pricing, Canada collected more than $4.2 billion in carbon levies on consumers and small businesses in 2020-21, which was tabled in the House of Commons this week.

It was the case with a carbon price of $40 per tonne of emissions. It added 8.8 cents per liter of gasoline, 10.7 cents per liter of diesel, and 7.8 cents per cubic meter of natural gas to the price of fuel, diesel, and natural gas.

Grants of about $500 million were distributed to small enterprises and non-profits to invest in energy efficiency.

Families received about $4.1 billion in what the federal government refers to as “climate action incentive payments.”

For the second year in a row, the cheques in Ontario and Manitoba fell short of the required 90 percent return to the province where they were paid.

Rebates exceeded that objective in Alberta and Saskatchewan, the only provinces in the federal carbon-pricing system. Because Alberta joined the program nine months after it began and was not included in the first round of incentive payments, the payments in 2020-21 covered two years of the levy.

Every other province has a carbon pricing system that meets federal minimum standards.

While a result, as the carbon price climbs by 25% this year, payments in Ontario and Manitoba would increase by 66% and 71%, respectively.

In Alberta, the payouts will only increase by 21%. In Saskatchewan, they are increasing by 36%.

The payments for a family of four in Ontario will be $745, $832 in Manitoba, $1,101 in Saskatchewan, and $1,079 in Alberta. In 2022, the first payment will be two quarters in July, followed by quarterly payments in September and January 2023.

According to Environment Minister Steven Guilbeault, eight out of ten families receive more than they pay.

Carbon levy revenues are higher in provinces that rely heavily on coal and natural gas for electricity generation, resulting in more significant incentive payments to those governments.

Carbon pricing incentivizes people to save money by lowering their fossil-fuel consumption. The subsidies are in place to protect households from the carbon tax, but they may save much more money if they also drive less or install more energy-efficient furnaces, windows, and other improvements.

The levy will climb to $50 per tonne of carbon produced on April 1, the last time it will be limited to a $10 increase. Every April for the next eight years, it will rise by $15 per tonne.

The next hike will raise the price of a liter of gasoline by another 2.2 cents. Many Conservative MPs and premiers have stated that Canadians cannot afford such an increase when gas prices have already risen due to Russia’s war in Ukraine.

Gas price spikes in recent weeks are not attributable to the carbon tax, according to Ken Boessenkool, a strategist at Sidicus Consulting and a former policy consultant to numerous federal and provincial conservative politicians. He believes most Canadians are aware of this.

However, he agrees with Elgie that the federal government should do a lot more to publicize the refund payments, so Canadians understand what they’re getting and why.

He remarked, “It’s outrageous that the administration that brought this in doesn’t spend more time.”

Read more: What is the Carbon Tax Rebate and How to Get It