Bill 60, An Act to Amend the Petroleum Products and Carbon Tax Act was passed yesterday by the 19th Legislative Assembly, aligning the NWT’s carbon tax system with the federal government’s national stringency standards (the backstop). Under the amended Act, the Government of the Northwest Territories retains control of the carbon pricing system in the Northwest Territories.
On August 5, 2021, Environment and Climate Change Canada (ECCC) announced that the carbon price will increase annually by $15/tonne of carbon dioxide equivalent emissions, starting at $65 a tonne in 2023 and rising to $170 a tonne by 2030. Other changes to the federal carbon pricing plan include new guidelines that prohibit carbon tax rebates that directly offset, reduce or negate the carbon tax.
The amended Petroleum Products and Carbon Tax Act revises the NWT carbon tax schedule to align with the new federal rates effective April 1, 2023. Other changes to the NWT carbon tax system in order to remain compliant with the new Federal guidelines will be done through regulations, including discontinuing carbon tax rebates for heating fuel and large industrial emitters.
To help mitigate the effects on the cost of living and economic development as a result of increased carbon tax rates and tightening of federal requirements, the GNWT will:
- Replace the current Cost of Living Offset (COLO) with a regional COLO to better offset the carbon tax burden borne by residents living in different regions. Under this system, residents who live in areas with higher living costs would receive a higher COLO payment.
- Provide an annual revenue-sharing grant to community governments of 10 per cent of projected net carbon tax revenues. The grants will require stated efforts to adapt to climate change, reduced reliance on fossil fuel and/or support for overall reduction of GHG emissions.
- Establish mine specific benchmarks for large emitters to provide similar treatment as the federal output-based pricing system (OBPS) while ensuring that the mines maintain a similar carbon tax burden as residents and other businesses.
- Continue to support projects and initiatives by northern businesses, industry and non-profit organizations to reduce greenhouse gas (GHG) emissions through its GHG Grant Program for Buildings and Industry, which provides up to 25 per cent of eligible project costs for business and industry applicants. As well, the GHG Grant Program for Government supports similar projects and initiatives by municipal, Indigenous and territorial governments, offering up to 75 per cent of eligible project costs. Funding for both is supplied via the GNWT and Government of Canada under the Low Carbon Economy Leadership Fund.
“A made-in-the-NWT solution for carbon pricing, with balanced approaches to unique Northern concerns, is the best way to meet our carbon pricing commitments while minimizing the impact on the cost of living and doing business in the Northwest Territories.”
- Caroline Wawzonek, Minister of Finance
- The carbon tax rate increase will take effect on April 1, 2023. All current measures under the NWT carbon tax system, including point of purchase rebates on heating fuel and large emitter rebates, will remain in place until March 31, 2023.
- The current large emitter rebate ,based on a facility’s total emissions, will be replaced by a rebate that is tied to a pre-determined, facility-specific fixed baseline.
- The large emitter individual grant program will close on March 31, 2023 with the remaining funds available until March 31, 2028.
- NWT carbon pricing approach changing to align with new federal requirements
- Carbon Pricing in the Northwest Territories
For media requests, please contact:
Manager, Public Affairs and Communications
Department of Finance
Government of the Northwest Territories
(867) 767-9168, ext. 15015