Alberta introduces carbon levy

The Alberta government has introduced Bill 20, the Climate Leadership Implementation Act, to create a carbon levy to be imposed on distributors of transportation and heating fuels starting January 1, 2017. Bill 20 is part of Alberta’s new climate policies announced in November 2015, which we discussed in a previous legal update.

The carbon levy is to be imposed on persons producing or supplying fuel in Alberta into a fuel system that produces heat or energy, such as natural gas to heat a building or gasoline or diesel to power a car or truck. Special requirements are included for fuel used by inter-jurisdictional carriers, diesel locomotives, the aviation industry and persons using mixtures and blends of fuels.

Exemptions will exist for fuels used by facilities subject to the current Specified Gas Emitters Regulation, fuels used in farming operations, fuels used by a consumer holding a carbon levy exemption certificate or fuels not put into a fuel system that produces heat or energy but used as a raw material in an industrial process. Fuel gas used in upstream oil and gas sites will also be exempt from the carbon levy, at least until January 1, 2023.

This levy will be collected and remitted by fuel distributors, and they undoubtedly will pass this cost on to their customers. The levy is based on the amount of carbon dioxide emitted when fuels are consumed and starts at $20 per tonne of CO2 and rises to $30 per tonne on January 1, 2018. The carbon levy on select fuels is as follows: