Manitoba Proposes Output-based Carbon Pricing Plan for Large Emitters

Manitoba has released “A Made-in-Manitoba Climate and Green Plan" Discussion Paper to propose carbon pricing rules for emission-intensive, trade-exposed sectors of its provincial economy which will be regulated under a new output-based pricing system.  As announced in its 2018 budget, certain industries, where carbon outputs are significant, will not be subject to the general carbon tax of $25 per tonne of carbon dioxide equivalent (CO₂e) emissions.

The proposed rules will apply to industrial facilities with annual CO₂e emissions of 50,000 tonnes or greater, and will relieve these sites from the cost of the carbon tax on their energy purchases.  Upon exceeding established limits (to be determined based on emissions performance standards for covered facilities, with three options currently under consideration by the government), emitters will be required to meet their carbon tax obligations by paying a $25 per tonne carbon tax on emissions in excess of the limits, using available emission offset credits (similar to a cap-and-trade system), or utilizing some combination of the two options.  The intent is for this system to regulate the carbon emissions of specific industries in a manner consistent with that employed by other jurisdictions, in order to maintain competitive balance, and the hybrid approach appears to be similar to the proposed federal carbon pricing backstop. 

In addition, the proposed framework will allow certain emitters to voluntarily participate in the output-based pricing system, where annual CO₂e emissions are between 10,000 and 50,000 tonnes and the industry qualifies as an emissions-intensive, trade-exposed sector of the economy. 

The government intends to implement the proposals starting in January of 2019 for all emitters except voluntary participants, which will be able to opt-in to the system in January of 2020.

The province is encouraging all stakeholders to provide written feedback on the proposed framework by September 30, which can be done by emailing ccinfo@gov.mb.ca.