Question Period Note: Carbon Pollution Proceeds Return

Carbon Pollution Proceeds Return

• In 2016, the Government of Canada announced carbon pollution pricing as a pillar of Canadian efforts for the reduction of greenhouse gas (GHG) emissions.
• In jurisdictions where the federal backstop applies, approximately 90 percent of revenues go back to families directly through the Climate Action Incentive payment. The other 10 percent is invested in carbon pollution reduction projects. For example, the Climate Action Incentive Fund made a round of investments using a portion of 2019-20 fuel charge proceeds.
• All carbon pollution proceeds will be returned to the jurisdiction of origin.
SUPPLEMENTAL
• Options are under consideration to ensure all carbon pollution proceeds are returned to jurisdictions of origin efficiently and effectively.
• Any unspent programming dollars from 2019-20 fuel charge proceeds, and for any other fiscal year, will be considered as part of future returns that will be specified by the Minister of Finance.
• The Government of Canada looks forward to sharing more information in due course.

• Under the Greenhouse Gas Pollution Pricing Act (GGPPA), the federal carbon pollution pricing system has two parts: a regulatory charge on fossil fuels like gasoline and natural gas (the federal fuel charge); and a performance-based system for industries, known as the Output-Based Pricing System (OBPS).

• For provinces that have not committed to pricing carbon pollution and where the federal fuel charge is currently in place, the federal government is returning approximately 90% of proceeds directly to families through Climate Action Incentive payments. The remainder of the proceeds from the federal fuel charge are returned to the province of origin through federal GHG reduction programs, such as the Climate Action Incentive Fund (CAIF) administered by Environment and Climate Change Canada (ECCC).

• In May 2019 ECCC launched the Climate Action Incentive Fund (CAIF) that allocated up to $218 million from the federal fuel charge to be delivered over two years in Ontario, New Brunswick, Manitoba, and Saskatchewan. These are the provinces that, at the time, had not put in place their own fuel charge systems. CAIF, which is winding down given eligible expenses needed to be incurred by March 31, 2021, has supported energy efficiency and GHG emissions reductions for small- and medium-sized enterprises and schools. These projects have helped organizations save energy related costs and reduce carbon pollution.

• As is legislated, the Government of Canada will return all direct fuel charge proceeds from 2019-20 and all subsequent fiscal years to the jurisdiction of origin. As part of Canada’s strengthened climate plan, A Healthy Environment and a Healthy Economy, there are efforts being made across the Government of Canada related to the next phase of climate actions, including carbon pollution proceeds return.

• The Government of Canada intends to launch a new merit-based program funded by proceeds collected from facilities covered by the OBPS in fiscal year 2021-22. Administered by ECCC, proceeds collected under the OBPS will be used to incentivize the long-term decarbonization of Canada’s industrial sectors by supporting the installation of clean technologies to reduce GHG emissions.

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