Should one scroll down to page 366 in the recently released Federal Budget under the highlighted “Total tax revenues” it announces as one source for the 2024-2025 year, they anticipate collecting $14.9 billion! They clearly state where that revenue is generated from and destined for in the future: “Pollution pricing proceeds to be returned to Canadians“!
It represents only 3.3% of the forecasted tax revenues yet it is still significant in that it is approximately $530.00 for each and every taxpayer but only about 50% of what they are granting to VW and Stellantis to manufacture EV!
So we 28 million taxpayers should wonder: Where are those recycled tax dollars coming from?
The Federal Carbon Charge
As it turns out it will be us taxpayers (residential and industrial) who are providing those “Pollution pricing proceeds” that supposedly will be returned to us, or will they?
Examining the Federal Government’s documents on the “Circular Economy” as it appears to apply, is summed up by them as follows:
“The federal carbon pollution pricing system has two parts: a regulatory charge on fossil fuels such as gasoline and natural gas, known as the fuel charge, and a performance‑based system for industries, known as the Output-Based Pricing System (OBPS). The federal system can apply in whole or in part in a jurisdiction.
Canada also designed its system to be revenue neutral: where the federal system is applied, all direct proceeds from the federal fuel charge and federal OBPS are returned to the province or territory where they were collected.“
Examining the Federal Carbon Charge (FCC) for Natural Gas
The government has decreed they are leveling a charge on natural gas, so it is worthwhile to note that according to the CGA (Canadian Gas Association) what Canada’s GHG emissions are from natural gas. The CGA states: “In 2020 the transmission, distribution and storage of natural gas produced around 10 Mt CO2eq emissions (Canada’s total GHG emissions were 672 Mt CO2eq) ie: 1.4% of emissions came from natural gas! We should wonder how those emissions if eliminated would be even noticeable as Canada’s total emissions on a global scale are only 1.5%.
The CGA also provide individual statistics and note in “2021 the average residential natural gas customer used 2,385 cubic metres1 of natural gas. Annual residential gas use varies across Canada from 1,900 to 3,100 cubic metres per year, depending on the climate in the region.”
The FCC as of April 1st, 2024, increased to 15.3 cents per cubic metre so if the average consumption remains the same in the current year the natural gas bill to heat your household will include $364 of those FCC costs!
The CGA report the total number of households who heat their homes with natural gas in Canada was over 6.8 million in the 2021-2022 season. What the CGA basically state is; all households with natural gas to heat their homes annually consume 16,218 million cubic metres of that fossil fuel source. The Federal government on the other hand suggest natural gas can be replaced with either expensive heat pumps using electricity from a fossil free grid at less cost or fuel your electric furnace from those same electricity grids!
If one does the simple math by multiplying 15.3 cents per cubic metre of natural gas consumed by those 6.8 million households the revenue from that charge represents $2.47 billion or 16.6% of the $14.9 billion they estimate as tax revenue associated with the “Pollution pricing proceeds to be returned to Canadians”!
Industrial Gas Costs
The Federal Fuel Charge Rates also apply to natural gas used for industrial purposes and if combined with hydrogen it is considered “non-marketable natural gas”! The FCC has been set at an even higher rate of 20.6 cents per cubic metre for it, in the 2024-2025 year but no consumption disclosures are available for the latter.
Looking at the StatsCAN data from June 2023 it notes; “In December 2022, natural gas deliveries to industrial consumers in Canada totalled about 8.3 billion cubic metres, with over 70% going to Alberta. The industrial sector in Alberta—the single largest consumer of natural gas in the country—received a record 5.8 billion cubic metres in December, the majority of which was used as fuel by the energy producing sector.“
As neither StatsCan nor the CER disclose what the total “non-marketable natural gas” was we will use the above noted 15.3 cents per cubic metre to calculate the foregoing. It suggests those 8.3 billion cubic metres would have generated revenue of $127 million for the month of December 2022 and perhaps as much as $1.5 billion for the full year 2024-2025 at those rates if those volumes are constant! The $1.5 billion would represent 10.1% of the forecasted $14.9 billion to the “Pollution pricing proceeds to be returned to Canadians”. Now try to imagine how that $1.5 billion in FCC costs would impact what those “industries” (including farmers, etc.) are producing by driving up their costs.
The foregoing suggests the combined FCC (Federal Carbon Costs) associated with Canada’s generation and consumption of natural gas would collectively represent about 26.7% or $3.975 billion of the $14.9 billion contained in the budget. This works out to around $141.00 per taxpayer so we should assume the shortfall in the budget projections will all come from the FCC applied to the use of other fossil fuels such as gasoline, diesel, propane, etc. fuels!
The price per metric ton of emissions from the natural gas sector for 2024-2025 looks to average around $39.75 per ton but its impact will drive up the price of everything associated with it and have only a very minor (immeasurable) impact on reducing Canada’s emissions!
We are shooting ourselves in the foot while China opens two coal plants a week!
Maybe PM Trudeau and NDP Leader Singh should get busy and plant some of those two billion trees he promised Greta Thunberg to absorb those GHG and save us Canadian households from this cost-of-living increase and avoid the “circular economy” designed by the WEF!