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Carbon and Greenhouse Gas Legislation in the Northwest Territories

May 2021

Carbon Tax in the Territories 

2030 Northwest Territories Climate Change Strategic Framework and 2019-2023 Climate Change Action Plan

The 2030 Northwest Territories Climate Change Strategic Framework [PDF] outlines how the territory plans to respond to the challenges associated with climate change. Over the long-term, the framework is focused on three goals:

  • transitioning to a strong, healthy economy that uses less fossil fuel, thereby reducing greenhouse has (GHG) emissions by 30% below 2005 levels by 2030
  • improving knowledge of the climate change impacts occurring in the territory; and
  • building resilience and adapting to a changing climate

The 2019-2023 Climate Change Action Plan (the Action Plan) is the first of two five-year action plans to implement the framework. The Action Plan is comprised of three sections:

  • Actions: Work currently underway or resourced to take place within 2019-2023;
  • Areas for future collaboration: High priority areas that need funding or capacity to proceed; and
  • Reporting and measuring progress: A tracking process for implementation of the Action Plan.

The Government of the Northwest Territories will be reviewing the Action Plan annually and updating the plan with new actions. After five years, a review of the Action Plan will be undertaken to guide the development and implementation of an updated Action Plan for 2025-2029.

Carbon tax

The Northwest Territories carbon tax became effective September 1, 2019,  established under the authority of the Petroleum Products Tax Act and the Petroleum Products and Carbon Tax Regulations. The carbon tax applies to listed types of fuels and is currently at $30 per tonne, up from $20 per tonne when it was first introduced. The rate will increase annually on July 1st until 2022, when the price will reach $50 per tonne.

The carbon tax excludes the following fuels:

  • aviation fuel purchases in the Northwest Territories
  • fuel in a  pre-packaged, factory-sealed containers with a volume of 10 litres or less
  • fuel delivered to, or purchased on a reserve under the Indian Act (Canada); and
  • fuel delivered to, or purchased by, a visiting force as defined in the Visiting Forces Act (Canada)

The Petroleum Products and Carbon Tax Regulations also contain a number of rebates to offset the carbon tax burden on taxpayers in the territory:

  • a 100% point-of-sale rebate for heating fuel for most residents, businesses, and governments
  • a point-of-sale rebate the NWT Power Corporation for carbon tax payments related to fuel needed to produce electricity to ensure electricity rates do not increase
  • a rebate program for large GHG emitters to partly offset the impact of carbon pricing and to incentivize investments to reduce GHG emissions
  • a Cost of Living Offset, which is a tax-free, non-income tested quarterly benefit that increases annually in step with carbon tax rate increases

2030 Energy Strategy

In April 2018 the territorial government introduced its 2030 Energy Strategy [PDF], which sets out the government’s long-term approach to supporting sustainable energy supply and use in the NWT.

The strategy has six key objectives:

  1. Work together to find solutions through community engagement, participation, and empowerment.
  2. Reduce GHG from electricity generation in diesel powered communities by an average of 25%.
  3. Reduce GHG emissions from transportation by 10% per capita.
  4. Increase the share of renewable energy used for space heating to 40%.
  5. Increase residential, commercial, and government building energy efficiency by 15%.
  6. Develop the NWT’s energy potential, address industry emissions, and meet national climate change objectives.

The territorial government will release public reports on its activities and progress relating to the strategy annually. Further, the strategy’s objectives will be re-evaluated in 2023 to account for technological developments.