Carbon tax could cost Regina $400K

The federal carbon tax will cost the City of Regina about $400,000 in 2019, according to a high-level internal estimate.

The added expense will come largely from increased fuel costs. The tax will be set at $10 per tonne for 2019 and will push up gas prices starting in April.

Barry Lacey, executive director of finance and corporate services, said he expects the number to climb far higher as the tax edges up to $50 per tonne by 2022.

“I think it is fair to say, just given how that tax is going to escalate if it goes through over the next three or four years, that it will be substantially more than that estimate,” he said.

“Speaking frankly, it will be in the millions at the end of the day.”

Those millions will be on an annual basis once the tax is fully implemented. Lacey cautioned that it will take time to fully understand the effect of the tax on city operations. He said the number doesn’t appear in the 2019 budget, but may be included in future years. He said the $400,000 estimate is preliminary and subject to change, as is the longer-term forecast.

“This number will be further refined,” he said.

While fuel costs make up the bulk of the estimate, Lacey said the city is also banking on higher power rates. Those “direct costs” are included in the estimate. But he’s bracing for indirect costs as well. Lacey said the city may pay more for goods as suppliers pass on the cost of the tax to the city.

But he warned that it’s challenging to “separate out” how much of the added cost will come from carbon pricing.

The city hasn’t broken down the costs by department, though Lacey said services that use the most fuel will likely see the highest spike. That could mean transit.

“I think it would be fair to say that they are certainly a part of our organization that will be impacted by this carbon tax,” he said.

The federal carbon tax is designed as an incentive to change behaviour, prompting people and organizations to reduce their greenhouse gas emissions. Lacey said the tax may be “a factor” in the city’s decision-making. But he noted that Regina has already been charting a greener direction “for some time.”

“That work is going to be occurring regardless of whether or not there’s a carbon tax in place,” he said.

Council approved a renewable city motion in October, tasking administration with developing a framework on renewable energy. Coun. Andrew Stevens, one of three councillors who proposed it, agreed with Lacey that council has already “gotten ahead of that issue.” But he said there’s still more Regina can do to reduce emissions.

“That’s kind of where we’re going,” he said. “So now it’s about, ‘all right, the carbon tax is implemented, what do we do today?’”

He mentioned vehicle idling requirements as one possible idea.

Stevens said the province may have “shot itself in the foot” by opting for confrontation in the courts, instead of pushing for tax exemptions that shield municipalities.

“Maybe there should be no taxes at all on fuel that’s consumed by diesel-burning buses,” he proposed.

“Do we want diesel-burning buses? Not forever. But I tell you what, you take 10 cars off the road, and you’re doing better with one diesel-powered bus.”

Maybe there should be no taxes at all on fuel that’s consumed by diesel-burning buses.