Alberta’s carbon levy will reward families, businesses and communities that take steps to lower their emissions.
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.
The carbon levy will be included in the price of all fuels that emit greenhouse gases when combusted. These include transportation and heating fuels such as diesel, gasoline, natural gas and propane. It doesn't apply directly to consumer purchases of electricity.
Certain fuels, such as marked gas and diesel used on farms, will be exempt from the levy.
All revenue will be reinvested back into Alberta to grow and diversify our economy as we reduce carbon pollution.
Starting January 1, 2017, the carbon levy will be applied to fuels at a rate of $20/tonne. One year later, the levy will increase to $30/tonne.
Table 1. Carbon levy on major fuels
|Type of Fuel||January 1, 2017||January 1, 2018|
|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|
|Total levy cost||$191||$259||$338|
|2018 costs and rebates||Natural gas cost||$152||$186||$205|
|Total levy cost||$286||$388||$508|
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.
Rebates will be provided to lower- and middle-income Albertans to offset costs associated with the carbon levy.
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.
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 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
|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)
|Maximum income to receive partial rebate
(Family Net Income)
|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.
- Accelerating Innovation Program
- 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.