Carbon Levy on Fossil Fuels

Prince Edward Island is actively participating in international efforts to combat climate change. The Province’s five-year Climate Change Action Plan provides a framework for both adapting to climate changes and to reducing greenhouse gas emissions. These efforts include working with the Government of Canada to introduce carbon pricing on fossil fuels in PEI. Carbon pricing involves:

1. A carbon levy to consumers, administered by the province; and 
2. An output-based pricing system administered by the federal government for large emitters, i.e. industrial facility emitting 50 kilotonnes (kt) or more of carbon dioxide equivalent (CO2e) per year.

How much is the carbon levy?

Until 2020, carbon pricing is not applied to furnace oil used for heating or propane. Carbon rates on 26 types of fuel is shown in Schedule of Levy Rates on Fossil Fuels.

Are any fuel sales exempt from carbon levy? 

The following industries and communities may qualify for carbon levy exemption:

Marked Fuel Permit holders:

Industries issued marked fuel permits under the Gasoline Tax Act, i.e. fishers, aquaculturists, farmers and custom agricultural contractors, are exempt from carbon pricing on marked gasoline and marked diesel fuel under the Climate Leadership Act and Regulations.  The levy exemption permit is combined with the Marked Gasoline/Marked Diesel Oil Permit.

Please note: If your fuel/levy exemption permits expires January 31, 2022, you must apply and pay a $20 issuance fee for a new permit by November 30, 2021. Core fishers must be in compliance with subsection 8(1) of the Certified Fisheries Organizations Support Act. Farmers must renew their bona fide farmer status for the purpose of farm property assessment. See Gasoline Tax Notice 117 Tax Exemption Permits.

Industries issued marked fuel permits with no carbon levy exemption pay a marked fuel carbon levy rate which is lower than the rate for unmarked fuel.

Pleasure craft owner/operators issued a marked fuel permit under Section 15 of the Gasoline Tax Act Regulations must declare each litre of marked fuel purchased and pay both the carbon levy and the gasoline tax calculated per litre at the unmarked fuel rate.  At the end of the boating season, submit with payment a completed Gasoline Tax and Carbon Levy Self-Declaration.  For information refer to Marked Fuel Permit for Pleasure Craft.

Combined Carbon Levy and Gasoline Tax Rates April 2019 (cln109-gtn298-noticecarbonlevyratesrevised01april2019.pdf (princeedwardisland.ca))

First Nation Reserve Residents:

First Nation individuals living on a reserve are exempt from carbon pricing on all fuels delivered to the reserve, under Section 87 of the Indian Act. Exemptions apply to interjurisdictional marine carriers, interjurisdictional air carriers and large emitters with a valid covered facility certificate issued by the Government of Canada.