The new carbon tax and ways to save

The battle against climate change reached into the wallets of Canadians in four provinces on April 1.

The carbon tax meant people in Ontario, Manitoba, Saskatchewan and New Brunswick started paying more for gasoline and heating fuel. For Nunavut and the Yukon, it will begin on July 1. The rest of the country already has it in place. So, let’s look at what the carbon tax is and how consumers can save.

Carbon taxes put a direct price on emissions. This means that greenhouse gas emitters—usually fuel producers and distributors—pay a certain amount per each tonne of carbon dioxide emitted from burning carbon-based fuels. In order to encourage them to decrease emissions, the price goes up slowly over time so households and industries have time to adjust and move toward less carbon-heavy practices.

Impacts fuel costs

The federal tax is $20 a tonne for this year and set to increase by $10 annually until it reaches $50 a tonne in April 2022.  The starting rate adds 4.4 cents to the price of a litre of gas, about four cents to a cubic metre of natural gas, and also drives up the cost of propane, butane and aviation fuel.

Consumers won’t have to pay a tax directly (corporations and businesses do), but they will face higher prices for goods and services from industries that emit higher greenhouse gases. The federal government will help counter this cost with an annual rebate to households based on the average expenses of a province and divided evenly across the board. In Ontario, for example, the average household is expected to receive $300.

Why is this policy necessary? There have been numerous reports outlining the risk to the planet if action is not taken to reduce carbon emissions. They include more extreme weather events such as flooding, drought and wildfires – all of which have implications for insurers and the premiums consumers pay.

Cut footprint

Since the tax’s purpose is to encourage people to reduce their carbon footprint, you can reduce the amount you spend on it if you modify your behaviour.

The David Suzuki Foundation suggests several ways you can reduce your carbon dioxide emissions:

• Check the Canadian government’s Auto Smart ratings for the next car you intend to buy to make sure it’s fuel efficient and low polluting.
• Walk, car pool, bike to work or take public transit. Even changing your habits once a week will help.
• If you move, consider buying a home closer to work so it reduces the amount you drive.
• Learn about the impacts of air travel and vacation closer to home.
• Compost your organic waste and recycle. This reduced greenhouse gas emissions associated with landfills.
• Eat local and seasonal food wherever possible. This reduces the costs of transportation to get products to market.
• Choose energy-efficient appliances. Consider washing your laundry in cold water and hanging your clothes to dry.
• Reduce your home heating and electricity use. A more energy-efficient home will lower your utility bills. Find out how you can increase energy efficiency through the EnerGuide for Houses program. You can also install a Smart thermostat or just keep your home a few degrees cooler in the winter months and wear a sweater! In the summer months, limit the use of your air conditioner.

Keep in mind, some home upgrades to improve energy efficiency can not only help you save on carbon tax, but also save on home insurance. Be sure to let your insurance broker know about any upgrades so they can look into any available discounts.