Name of Instrument
Northwest Territories carbon tax
Subnational - State/Province Carbon tax
Implemented in 2019
Northwest Territories
Set price, Rebates (intensity-based)
CO2
Upstream
Not permitted
Covered Sectors
- Covered
- In principle
Description
Northwest Territories introduced a territorial carbon tax on all fossil fuels in September 2019. The rate is intended to change in line with the federal carbon price. The carbon tax meets the benchmark stringency requirements to replace the federally imposed fuel charge.
Recent Developments
From April 1, 2023, the carbon price will increase in line with the federal benchmark.
In November 2022, the federal government announced that the Northwest Territories has proposed a full system that meets the updated federal benchmark.
Carbon tax rates were increased to $65/tonne of greenhouse gas (GHG) emissions on April 1, 2023 and will continue to grow by $15/tonne annually until the rates reach $170/tonne in April 2030.
In October 2023, the Canadian Government announced a carbon tax exemption and rebates for heating oil used by households in rural areas. The carbon tax reprieve is intended to last for three years and is intended to relieve cost of living pressures.
In January 2024, the Government of the Northwest Territories announced that it will also suspend its carbon tax on heating diesel fuel oil for all users except large emitters from April 1, 2024 to March 27, 2027.
Coverage
The Northwest Territories carbon tax applies to CO2 emissions from all types of petroleum-based fuel, except aviation gasoline and aviation jet fuel. Fuel delivered to, or purchased by, an Indian band (as defined by the Indian Act) on reserve is also exempt, as is fuel purchased in pre-packaged containers of 10 litres or less. It does not cover emissions from flaring, livestock or LULUCF.
The carbon tax does not apply to carbon-based fuels used to generate electricity for community distribution (this is the same as the federal exemption for carbon-based fuels used to generate electricity for community distribution in regions that are not attached to the North American electrical grid.)
With the January 2024 announcement, the carbon tax will not apply to diesel fuel oil for heating for all but large emitters effective April 1, 2024 to March 31, 2027.
Operators will not have to pay the carbon tax if the fuel is delivered outside the Northwest Territories.
Aviation fuel and non-marketable natural gas are exempt from the carbon tax.
Various rebates have been introduced with the carbon tax to offset a part of the carbon cost on residents, governments and business entities.
Pricing and allocation approaches
The price is set by the Government Operators will not have to collect pay the carbon tax if the fuel is delivered outside the Northwest Territories.
The following are exempt from the carbon tax:
• aviation fuel;
• fuel used in the generation of electricity for remote communities
• small amounts of pre-packaged fuel;
• fuel used for specific purposes (e.g. by Indian or Indian Band and visiting forces)
Compliance Approaches
Upstream. The final consumer is liable for the tax but the distributors of fuel within the territory are liable for collecting the tax. The tax collected is submitted to the government on a monthly basis.
Relation to other compliance CPIs
The carbon tax meets the benchmark stringency requirements to replace the federally imposed fuel charge for 2023 to 2030.
Covered Emissions
Price range:
in 2023
Indicates instruments with multiple price levels. Only the main rate is shown for these instruments. Data last updated on 1 April 2023
