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 fuel charge to consumers, administered by the federal government; 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?

The federal government lists the current Fuel Charge Rates, and the historical provincial carbon levy rates that were in place from April 1, 2019 to June 30, 2023 are shown in Schedule of Levy Rates on Fossil Fuels.

Are any fuel sales exempt from the federal fuel charge? 

The federal government does offer Fuel Charge Relief to farmers and fishers and certain other groups. 

Information on the Transition from the Provincial Carbon Levy to the Federal Fuel Charge (July 1, 2023)

I have a provincial carbon levy exemption letter.  What will happen on July 1, 2023?

The provincial carbon levy exemption will cease on July 1, 2023.  More information is available in CLN:129 Prince Edward Island Carbon Levy Exemptions Ending.

I have a provincial marked fuel permit.  What will happen on July 1, 2023?

Your existing permit will continue to give you an exemption from the provincial gasoline tax, but the provincial carbon levy exemption will end.  You may be able to seek an exemption from the federal fuel charge that is replacing the provincial carbon levy.  More information is available for marked fuel permit holders in CLN:130 Prince Edward Island Carbon Levy Exemptions Ending.

I am a petroleum retailer who will have on-hand inventory on July 1, 2023.  Is there a refund available on carbon levy paid on-hand inventory on July 1, 2023?

Yes, the province will provide a refund on carbon levy paid on-hand inventory on July 1, 2023.  Retailers can access more details with CLN:131 Petroleum Retailers Refund of Carbon Levy Inventory On-Hand.   The refund forms is:  Retailer’s Carbon Levy Refund.

I am an registered IFTA carrier.  Will there be changes for my operation related to the transition to the federal fuel charge on July 1, 2023?

Yes, the PEI IFTA rates beginning in Q3-2023 will simply reflect the provincial gasoline tax rates and will no longer include the provincial carbon levy rate.  More information is available in GTN:316 / CLN: 132 IFTA Rate Changes – Federal Fuel Charge. 

Links:

Retailer's Carbon Levy Refund Form