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Moving Towards a Renewable North: Understanding Carbon Taxes 4.3 kW solar array installed at PolarGrizz Lodge, Sachs Harbour in Sept. 2010 Photo: GNWT‐ENR Carbon taxes: Key Facts • Carbon taxes can be revenue neutral. Every dollar NWT citizens spend on a carbon tax could be returned to citizens through tax reductions, tax credits, or rebate cheques in the mail. • The carbon tax is a "smart tax." a tax on things we want less of and that hurt our society (greenhouse gas emissions), so that we can have less tax on positive things such as our income. • A carbon tax can help reduce greenhouse gas emissions that cause climate change. • Reducing our use of fossil fuels and moving to renewable energy sources makes our communities and economy stronger and less vulnerable to oil price increases. • A carbon tax can be designed so that it protects remote communities and lower income families. Tax rebates can be higher for citizens in higher cost areas, such as remote and northern communities, and programs can be designed to enable low‐ and middle‐income families to reduce their energy use. Make your voice heard! As part of its Revenue Options discussion paper that was released in September 2010, the Government of the Northwest Territories (GNWT) is exploring the option of a revenue‐neutral carbon tax to reduce greenhouse gas emissions. Find the discussion paper at: Mail: Revenue Options Consultations, Fiscal Policy Division, Department of Finance, GNWT P.O. Box 1320‐L5 Yellowknife, NT X1A 2L9 Email: [email protected] http://www.fin.gov.nt.ca/taxation/revenue‐options/index.htm This sheet provides information on what a carbon tax is, what "revenue‐neutral" means, and how a carbon tax could work to address your concerns. We encourage people to write or call the GNWT with your ideas and feedback! ________________________________________________________________________________ Ecology North www.ecologynorth.ca 5013 51 Street, Yellowknife, NT X1A 1S5 Ph: (867) 873‐6019 ! Why Should We Tax Carbon? A carbon tax can help reduce greenhouse gas emissions that cause climate change. A carbon tax is a "smart tax". In a smart taxation system, we tax things we want to reduce, and have less tax on things that are beneficial to society. For example, Canadian governments tax cigarettes and alcohol. We reduce taxes on savings, such as registered retirement savings plans (RRSPs), to encourage Canadians to save for retirement. Burning fossil fuels such as gasoline, diesel and heating fuel releases carbon dioxide (CO2), a greenhouse gas that causes climate change. Many countries, such as Sweden and Finland, have learned that putting a price on carbon is one of the best ways to reduce greenhouse gas (carbon) pollution while minimizing potential impacts on the economy. Syncrude oil sands upgrader and complex. David Dodge, The Pembina Institute. Reducing our use of fossil fuels and moving to renewable energy makes our communities and economy stronger and less vulnerable to oil price increases. High fuel prices in 2008 significantly increased costs for many residents and the GNWT. We can strengthen our local economies by making our homes, businesses and transportation more energy efficient, and by expanding our use of renewable energy sources such as wood, solar, wind and geothermal. A carbon tax can provide an incentive and funding for us to improve our energy efficiency and make the NWT stronger and less vulnerable to future fossil fuel price increases. Wood pellet energy is renewable, cost‐effective and protects us against future fossil fuel price increases. Photo: Arctic Energy Alliance. Climate change is an important issue for NWT residents. Climate change is an important issue for NWT residents, and it is having the greatest effect on those who can least afford it. Residents are experiencing damage to building foundations and highways as permafrost melts. There is increased slumping along riverbanks, and populations of animals and fish are changing in unpredictable ways. The costs of repairing damaged building foundations alone in the NWT could exceed $420 million (Furgal and Prowse 2008). The church in Tsiigehtchic is at risk due to riverbank slumping. Photo: Craig Scott How would a carbon tax work? A carbon tax is charged on fuels based on the amount of carbon dioxide released when a fuel is burned. For example, when natural gas is burned, it releases less carbon dioxide per unit of energy produced than heating fuel. Therefore, natural gas would have a lower carbon tax than heating fuel. There is no carbon tax on renewable energy sources such as wood, solar, wind and geothermal. The purpose of a carbon tax is to encourage us to use less fossil fuels, help us to improve our energy efficiency, and increase use of renewable energy sources and lower carbon fuels. The proposed NWT carbon tax would mean that $10 of tax would be charged per tonne of CO2 equivalent produced by burning a fuel. Based on this rate, the carbon tax rates on the various fuel types would be the following: ● ● ● ● ● ● ● Jet fuel 2.61 ¢ / litre Heating fuel 2.55 ¢ / litre Diesel 2.55 ¢ / litre Aviation fuel 2.46 ¢ / litre Gasoline 2.22 ¢ / litre Propane 1.54 ¢ / litre Natural gas 1.90 ¢ / m3 What does revenue-neutral mean? The carbon tax as currently described by the GNWT would be revenue‐neutral. This means that for every dollar collected by the GNWT from taxpayers through the carbon tax, the same amount of money would be directly returned to residents and businesses through rebate cheques and tax cuts. For residents, one option the GNWT is proposing is to give a carbon tax rebate cheque of $100 per adult and $50 per child under the age of 18. Some revenue from the carbon tax could also be used to create programs to support people and businesses to switch to renewable energy and increase their energy efficiency so they pay less carbon tax over time. This would not be revenue‐ neutral, but would increase the environmental effectiveness of the carbon tax. Photo: Tessa Macintosh Protecting low-income families and remote communities A carbon tax can be designed so that it protects lower‐ and middle‐income families and remote communities. The money collected from the carbon tax can be returned to families and communities through tax credits, payments or improved services. One of the best ways to ensure that lower‐income families are protected is to provide a carbon tax rebate in advance of the heating season. The GNWT proposes to pay a higher tax rebate to families in higher cost regions, such as remote and more northern communities. This will be important, as heating costs vary across different regions of the NWT. For example, an average three‐bedroom house in Yellowknife uses 4778 litres/year of heating fuel, while the same house in Inuvik would use 5710 litres/year (Canadian Geographic 2008). This is nearly a 20% difference. For most families, heating fuel is the largest fossil fuel expenditure. Myths and realities about the proposed carbon tax Myth: Alternative energy sources such as wind, solar and geothermal are not affordable or technically reliable in the North. Reality • • • • Many businesses and residents, as well as the GNWT are already saving money by installing wood pellet boilers and stoves for heating. The reliability and cost effectiveness of solar energy has prompted residents in Sachs Harbour, Inuvik, Wekweeti, Paulatuk, Ulukhaktok and Behchoko to install solar energy systems on buildings in 2010. A strong business case has been made to replace fossil fuel with geothermal energy from Con Mine to heat all large buildings in downtown Yellowknife. The City proposes to build this project in the next five years. Wind turbines are already being used to generate electricity at lower costs than with diesel energy in more than 15 Alaskan communities. Gwich'in Wellness Centre: New 2.3 kW solar array installed in September 2010. Photo: GNWT‐ENR. Renewable energy projects are made more financially affordable if the true costs of fossil fuel use are charged ‐ including a charge for greenhouse gas emissions through a carbon tax. Myth: Because the carbon tax is revenue neutral, people won't have an incentive to change their carbonemitting habits. Reality If people reduce their use of fossil fuels, Myth: We don't need to reduce carbon pollution because we're a small population and we don't produce much pollution. they will pay less carbon tax, and still receive the same tax credits and rebate cheques. Therefore, people who cut their carbon emissions more will benefit compared to those who cut emissions less. Reality Even though our population is small, Myth: A carbon tax will ruin our economy. Reality Scandinavian countries have used carbon taxes since the early 1990s. They have greatly reduced carbon pollution and experienced economic growth at the same time. Sweden's economy has grown 48% since 1990, while its greenhouse gas emissions have dropped 9%. Canada's economy grew by 51% between 1990 and 2005, while its greenhouse gas emissions increased by 22% (Corporate Knights, Spring 2009). B.C., Québec and Alberta already have a carbon tax. each NWT resident produces almost twice as many greenhouse gases (40 tonnes/year) as the average Canadian (22 tonnes/year) and eight times the global average (5 tonnes/year). To reduce the impacts of climate change, we all need to reduce our fossil fuel use. There is a critical need for an international agreement to reduce greenhouse gas emissions. The NWT needs to pull our own weight if we want this to happen, by reducing our own emissions. If the NWT doesn’t take serious action, we can’t expect others across Canada or around the world to listen to NWT residents when we raise concerns about the impacts of climate change in the North. Ecology North www.ecologynorth.ca 5013 51 Street, Yellowknife, NT X1A 1S5 Ph: (867) 873‐6019 !
