Alberta nonprofit ‘pretty appalled’ that federal government redirected carbon tax proceeds

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A nonprofit that advocates solar power in Alberta questions why a promised portion of federal carbon tax revenue hasn’t flowed to municipalities, schools, hospitals and nonprofits in Alberta.

After Alberta repealed its own carbon tax in 2019, Ottawa announced plans to begin applying the federal charge on fossil fuels like gasoline and natural gas in 2020.

In a press release issued at the time, the federal government said that fuel levy proceeds would be returned – primarily directly to individuals, but also “to support other sectors, including small and medium-sized businesses, schools, hospitals, non-profit organizations and Indigenous communities across the province.”

A backgrounder indicates that approximately $610 million would go to these groups in Alberta over four fiscal years.

Ottawa reiterated the formula in a December 2020 document, including Alberta in the list of provinces that would see 10% of carbon tax funds used to support “small businesses, schools, universities, municipalities and indigenous groups”. (Provincial governments with their own carbon pricing programs, such as British Columbia, receive all proceeds.)

According to Solar Alberta’s Executive Director, Heather MacKenzie, many municipalities, schools and not-for-profit organizations were anticipating access to this funding stream.

In a 2020 report to administrators at Edmonton Public Schools, for example, administrators said the school board’s infrastructure department planned “to investigate all funds made available to the division” through the Climate Action Incentive Fund (CAIF).

But the money never came, MacKenzie said.

“I’m actually quite appalled at the lack of transparency,” she told CBC News.

MacKenzie said Environment and Climate Change Canada told the nonprofit at a meeting this spring that, in line with the 2022 federal budget, that portion of the carbon tax proceeds would instead be distributed to Indigenous groups, farmers and businesses exposed to emissions-intensive trade. .

“New programming to provide this funding over the past few years will be announced by the Minister of Finance in due course,” an ECCC spokesperson told CBC News in an email this week.

The budget says small and medium-sized businesses in jurisdictions that don’t meet federal carbon policy requirements will receive about $1.5 billion in fuel levy proceeds collected between 2020-21 and 2022-23. . Additionally, approximately $120 million of unpaid carbon tax proceeds from 2019-20 would be returned under the same program.

Heather MacKenzie, Executive Director of Solar Alberta, checks out the solar panel on a roof at the Northern Alberta Institute of Technology in Edmonton. (Adrienne Lamb/CBC)

MacKenzie said Solar Alberta supports distributing funds to Indigenous communities, but is concerned that carbon tax revenues will be redirected from energy efficiency projects in hospitals and schools to high-emitting companies.

The ECCC spokesperson said municipalities, universities, schools and hospitals can apply for the Low Carbon Economy Fund, to which the federal budget allocated $2.2 billion over more than seven year.

Other affected groups

Solar Alberta is not the only organization frustrated with the distribution of this portion of the federal carbon tax proceeds.

Earlier this month, delegates to the Canadian Chamber of Commerce’s annual general meeting overwhelmingly supported a resolution calling on the federal government to return remaining carbon tax proceeds and allow businesses to easily access.

The federal carbon price started at $20 per tonne of emissions in 2019, rising $10 per tonne each year to reach $50 per tonne in 2022. Starting next year, the price will increase by $15 per tonne. ton each year, reaching $170 by 2030.

Prabha Ramaswamy, CEO of the Saskatchewan Chamber of Commerce, said the carbon tax hike has weighed on businesses, leaving them less able to invest in emissions reduction projects.

She also worries that funding will now only go to companies exposed to emissions-intensive trade – those that pay a lot of carbon tax and compete with companies in jurisdictions without carbon pricing.

“Fewer of our businesses will actually be eligible for this money,” Ramaswamy said.

Steven Woodhead, senior director of communications for the Federation of Canadian Municipalities, said FCM also recently urged the federal government to provide more clarity to municipalities on the results of CAIF funding.

Report finds unspent money

A report released this year by the Office of the Auditor General of Canada found that ECCC had not disbursed all funds allocated to the CAIF program due to “delivery challenges, such as low program uptake due to the pandemic and the failure of partnerships”.

The report also indicates that Indigenous groups and small and medium-sized businesses remain disproportionately impacted by carbon pricing.

Scott MacDougall, senior adviser to the Pembina Institute, a clean energy nonprofit, said he was not surprised to learn that the federal government was focusing more on Indigenous groups and small businesses because they were mentioned in the Auditor General’s report.

He said while Canada’s carbon tax system is admired as an elegant economic solution to reducing carbon emissions, the government could do a better job of communicating how tax revenues are allocated.

“I think there’s an appropriate level of questioning and maybe frustration around that 10%,” he said.

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