British Columbia's Carbon Tax

B.C.’s carbon tax puts a price on carbon pollution, providing a signal across the economy to reduce emissions while encouraging sustainable economic activity and investment in low-carbon innovation.

In 2008, the province implemented North America’s first broad-based carbon tax.

The carbon tax applies to the purchase and use of fossil fuels and covers approximately 70% of provincial greenhouse gas emissions.

Carbon pricing is gaining momentum globally. In Canada, the federal government implemented a coordinated nation-wide carbon price, beginning at $20 per tonne of carbon dioxide equivalent emissions (tCO2e) in 2019 and rising to $50 per tonne. As of 2019, over 70 jurisdictions, representing about 20% of global GHG emissions, have put a price on carbon.

Approach to Carbon Pricing

On April 1, 2021, B.C.'s carbon tax rate rose from $40 to $45 per tCO2e. The rate is scheduled to increase to $50 per tonne on April 1, 2022. To help provide relief during the COVID-19 pandemic, a previously scheduled increase was postponed in 2020.

New revenues generated from increasing the carbon tax will be used to

  • Provide carbon tax relief and protect affordability
  • Maintain industry competitiveness
  • Encourage new green initiatives

To improve affordability, in 2020 government increased the Climate Action Tax Credit to $174 per adult and $51 per child as of July 1, 2020. In addition to the July 1, 2020 increase, a one-time enhancement was made to the climate action tax credit payment as part of the COVID-19 Action Plan, providing up to $174.50 more per adult and $51.25 more per child.

The credit helps offset the impact of the carbon taxes paid by low- and middle-income individuals and families and is issued four times a year through the Canada Revenue Agency

Government also offers several carbon tax programs for businesses and local governments.

The CleanBC Program for Industry directs an amount equal to the incremental carbon tax paid by industry above $30/tonne into incentives for cleaner operations. The program is designed for regulated large industrial operations, such as pulp and paper mills, natural gas operations and refineries, and large mines.

The program includes:

  • A CleanBC Industrial Incentive that reduces carbon-tax costs for operations meeting world leading emissions benchmarks, and
  • A CleanBC Industry Fund that invests some industrial carbon tax revenue directly into emission reduction projects, helping to make our traditional industries cleaner and stronger.

Tax Rates by Fuel

Different fuels generate different amounts of GHG emissions. The April 2021 carbon tax rate of $45 per tonne must be translated based on the type of fuel used. Below are rates for select fuels.

Fuel

Tax Rate Based on $45/Tonne of Emissions

Gasoline

 9.96¢/litre

Diesel (light fuel oil)

11.71 ¢/litre

Natural gas

8.82 ¢/cubic meter