Provincial or federal: which carbon tax is cheaper?

Alberta farmers can expect to initially pay less for a carbon tax under the federal government if the provincial program is scrapped, but costs will creep up in the future.

The carbon tax will remain in Alberta no matter who forms the next provincial government, but the costs of the tax will depend on who’s in power.

A re-elected NDP government would maintain the tax at $30 a tonne, costing farmers $1.517 per gigajoule of natural gas and 4.62 cents per litre for propane.

If the United Conservative Party wins this week and scraps the levy, the federal tax will kick in at $20 per tonne, costing producers 3.91 cents per cubic metre for natural gas and 3.1 cents per litre for propane.

The federal price, however, will increase to $50 per tonne by 2022, while Alberta has no plans to increase the $30 per tonne figure until 2021, meaning a federally imposed scenario will cost farmers more in the future.

Under both plans, farmers are exempt from paying the tax on marked gasoline and diesel. Greenhouse growers are also rebated 80 percent of their natural gas and propane costs. The tax doesn’t apply to electricity in Alberta.

The total cost will vary per farm, depending on natural gas and propane use, but the Agricultural Producers Association of Saskatchewan says it will cost $1.99 per acre in 2019, rising to $3.85 per acre by 2022.

The farm group didn’t factor in fertilizer use as part of the costs.

What isn’t clear is whether scrapping the Alberta levy will put numerous energy efficiency and carbon offset programs for agriculture in jeopardy.

About $49.5 million from the tax has gone to fund programs, helping producers upgrade irrigation pivots, as well as install solar panels, better grain dryers, cattle waterers and similar initiatives.

The province’s climate plan, which the carbon tax is part of, helps fund Alberta’s carbon offset programs, which some say could also be in jeopardy if the provincial tax is scrapped.

The programs essentially allow producers practising no-till to sell credits to heavy emitters, allowing them to offset their emission levels.

Private aggregator companies act as go-between parties, buying credits from farmers and selling them to large emitters.

“Jason Kenney’s utter chaos in terms of some of the promises he’s made around climate policies is that it has introduced an element of investor uncertainty in the (aggregator) market,” said NDP candidate Shannon Phillips, speaking as the environment minister during an interview on March 14.

The UCP, however, has said it can still fund programs without the tax through other means.

Party leader Jason Kenney has suggested he would scrap Energy Efficiency Alberta, the agency that helps dole out funding raised through the levy, but instead create what’s called the Technology Innovation and Emissions Reductions program, which would fund clean technologies to reduce carbon emissions.

Kenney’s carbon plan would still see a price on heavy emitters, and he wants to look at carbon offset programs, one possibly being through zero-till incentives

As for the federal levy, funds that are collected don’t appear to go toward agriculture programs.

However, the federal government has already committed nationally to the $3 billion Canadian Agriculture Partnership program, which works similarly to the former Growing Forward plan by helping fund energy efficiency.

CAP also funds programs dealing with market growth and diversification, risk management and public trust.

With the federal carbon tax, however, Albertans might get higher rebates.

Ninety percent of the levy dollars will be rebated to citizens under the federal program, with the remaining 10 percent going toward supporting small- and medium-sized businesses, universities, hospitals, schools, municipalities, non-profits, Indigenous communities and remote areas.

In Alberta, 60 percent of the carbon tax goes to household rebates while 40 percent goes to green technology, city transit and lowering the small business tax.

Under the federal plan, the average family of four in Saskatchewan is expected to receive $609 per year in rebates. Manitoba families of four, on average, will receive $339.

In Alberta, couples with two children who earn less than $95,000 per year are rebated $540. No federal rebate calculation has been done for Alberta because the federal tax isn’t imposed.

Some farm organization leaders have said they would rather have a provincial carbon levy if they had to choose between the two programs, though many would like there to be no tax.

“We don’t want to put ourselves in the same scenario as Saskatchewan, where it is imposed (federally),” said Lynn Jacobson, president of the Alberta Federation of Agriculture. “We like the offset programs, and it’s a matter of having control over where the money should go.”

If the tax stays in place, farmers are hoping they can be exempt from paying it on natural gas and propane.

It’s also being fought in court, with Saskatchewan challenging that the federal government has no right to impose the tax.

The government of Ontario and New Brunswick are backing Saskatchewan in the court play, and Kenney plans to join the fight if elected.

But the federal carbon tax might not last long.

If the federal Conservatives win the election this fall, the party promises to scrap the tax.

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