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Nunavut Carbon Rebate

About

Launched July 2019, the Nunavut Carbon Rebate (NCR) pays half the federal government’s carbon tax on fuel like diesel and gasoline. Consumers in Nunavut pay the other half when they purchase the fuel.

Through the NCR, the GN reduces the direct cost of the federal carbon tax that Nunavummiut and their businesses pay at the point of purchase. This is done in recognition that Nunavummiut do not have as many options to lower our use of fossil fuels as other Canadians.

 

How it works

The Department of Community and Government Services’ Petroleum Products Division (PPD) distributes most fuel in Nunavut. As a distributor, PPD is responsible for collecting federal carbon taxes on behalf of the Canada Revenue Agency (CRA) throughout the year. The amount of tax PPD collects for the CRA depends on the amount and type of fuel PPD sells.

PPD normally passes the full cost of taxes on to its customers. Because of the NCR, however, PPD passes on only half the carbon tax to its customers. The Department of Finance pays the other half “behind the scenes.” In this way, the GN rebates (gives back) 50% of the federal carbon tax to consumers whenever they purchase fuel.

 

About the carbon tax

The Government of Nunavut supports efforts to combat climate change, including taking steps to reduce harmful greenhouse gas emissions.

Carbon pricing lowers harmful emissions by making certain activities, like burning fossil fuels, more expensive. As the price of fuel increases, individuals and businesses have a financial incentive to reduce their use.

In 2019, the Government of Canada introduced a carbon tax across Canada,increasing the cost of fossil fuels like gas and diesel by a few cents a litre. The amount of tax depends on how ‘clean’ the fuel is (how much pollution is released when it burns). Dirtier fuel, such as diesel, is taxed higher than cleaner fuel, like propane. The tax rate will increase each year until 2022.

April 1 2019 2020 2021 2022
$ / tonne 20 30 40 50
Gasoline ($/ L) 0.0442 0.0663 0.0884 0.1105
Diesel ($/ L) 0.0537 0.0805 0.1073 0.1341
Propane ($/ L) 0.0310 0.0464 0.0619 0.0774

The GN supports national efforts to reduce climate change, but recognizes that Nunavummiut have fewer options to reduce their use of fossil fuels than southern Canadians.

Remote communities, limited infrastructure, and a small economy mean it will take longer for Nunavummiut and their businesses to adjust to the higher prices. For this reason, the GN is committed to reducing the direct cost of the federal carbon price—allowing Nunavummiut and their businesses more time to adapt to the higher prices.

 

Funding

The Department of Finance pays for the Nunavut Carbon Rebate from its budget, which it receives from the Legislative Assembly each year.

The actual cost of the rebate depends on the amount of carbon tax PPD owes the Government of Canada, which itself is based on the amount and type of fuel Nunavummiut consume. 

The GN has designed the NCR to help Nunavummiut transition to the federal carbon tax over time, not to subsidize the cost of fuel permanently. Starting in 2024, the GN will gradually reduce the value of the NCR until the program phases out in 2028.

 

Additional Information

Nunavut Carbon Rebate – Contribution Policy
Nunavut Carbon Rebate – Frequently Asked Questions
Nunavut Carbon Rebate – Fact Sheet
Pan-Canadian Framework for Climate Change and Growth