The new federal carbon tax starts in 2018 for provinces that don’t have their own approved programs. That means every province, in one way or another, will have a carbon pricing program within the year. The good news is that farm fuel is exempt.

Carbon tax: What can you expect in the year ahead

The federal carbon pricing backstop will be implemented in 2018 for any province that doesn’t already have its own approved program. The backstop proposes a hybrid carbon pricing policy that will see a carbon tax applied to consumption of fossil-fuel-based energy as well as an emissions cap starting no sooner than January 1, 2019 for facilities emitting more than 50,000 tonnes of carbon dioxide equivalent (CO2e) per year.

The federal government has stated that any jurisdictions wishing to adopt the backstop should make that request by March 30, 2018. “If a jurisdiction has not notified the federal government of its intention to implement legislation that will meet the federal standard by Sept. 1, 2018, that jurisdiction will have the backstop plan imposed as of Jan. 1, 2019 at the price of $20 per tonne of CO2e,” says Mark Walker, policy development manager with the Canadian Canola Growers Association. Currently, British Columbia, Alberta, Manitoba and Ontario should meet the proposed federal standard as of Sept. 1, 2018.

B.C. has had a carbon tax plan in place since 2008, and Alberta’s plan went into action in 2017. Manitoba recently announced the ‘Made-in-Manitoba Climate and Green Plan’.

What is a carbon tax?

A carbon tax is a charge to an individual or business that uses carbon-based energy such as diesel, gasoline and natural gas. The point is to reduce the use of fossil fuels. This tax is applied based on the global warming potential of the carbon-based energy consumed. In practice, this means governments levy carbon taxes per tonne of greenhouse gas (GHG) consumed.

The federal government’s carbon pricing backstop plan sets a $10-per-tonne tax for any province has not put their own pricing in place. This tax increases by $10 per tonne every year until it peaks at $50 per tonne in 2022. Many provinces felt this wasn’t the best approach, so they made their own tailor-made plans.


On Jan. 1, 2018, the Alberta government increased its carbon tax from $20 to $30 per tonne. The Alberta carbon tax will increase from 4.49 cents per litre to 6.73 cents per litre for gasoline, from 5.35 cents to 8.03 cents per litre for diesel, from $1.011 to $1.517 per gigajoule for natural gas and from 3.08 cents to 4.62 cents per litre for propane.

Alberta farmers can have a bit of a sigh of relief because marked farm fuels (diesel and gasoline) are exempt. The carbon levy will apply to natural gas and propane. Farmers may also notice an increase in electricity costs as electricity providers pass along costs through the cap-and-trade system.

In addition to its carbon tax, Alberta has a cap-and-trade system, which it officially refers to as the output-based allocation system that gives large emitters the option to trade and purchase emissions credits. If a large emitter goes over their provincial emission cap, they can purchase credits from other facilities.

“The [Alberta] government is all about net reduction in emissions, so the increase [in the price on carbon] could influence farmers to change some of their practices or upgrade equipment to further increase their efficiencies and improve the management of their costly inputs,” says Karla Bergstrom, manager, government and industry affairs, at Alberta Canola. “Farmers may have to take another look at beneficial management practices that are good for both the environment and their bottom line, take advantage of grants for energy-efficient programs, renewable energy projects and green infrastructure. From some of our calculations for farms that are incorporated, the decrease in the small business tax would offset the impact of the carbon tax on those farms. The small sole proprietorships would qualify for the provincial rebate, but it’s the larger sole proprietorships and partnerships that would feel the effects of the carbon tax the hardest.”


The Climate and Green Plan has set the carbon tax at $25 per tonne. The Manitoba government expects to implement the tax sometime in 2018. The advantage to this plan is that the tax would not increase yearly, compared to the federal government’s carbon pricing backstop. Over the long term, this could save Manitobans an estimated $240 by 2022 compared to the federal carbon pricing backstop, according to a Manitoba government document.

In Manitoba, the carbon levy will not apply to marked fuel used for farming operations.


Saskatchewan’s plan makes no mention of a price on carbon and the Saskatchewan government has stated that it does not want to tax people.

Through its plan, ‘Prairie Resilience: A Made-in-Saskatchewan Climate Change Strategy’, Saskatchewan will give large emitting facilities flexible compliance options that include making improvements at facilities to reduce emissions intensity, purchasing a carbon offset, reducing GHG emissions, using credits purchased from another facility participating in the emissions trading scheme or paying into a technology fund. Facilities in Saskatchewan that emit more than 50,000 tonnes of carbon every year are already reporting to the federal government and will be included in the proposed scheme.

Saskatchewan farmers can expect some sort of carbon pricing policy to kick in this year or next, whether through a Saskatchewan plan or the federal backstop. Federal backstop rules do stipulate relief from the levy “for gasoline and diesel fuel used by registered farmers in certain farming activities.”