N.W.T. brought in $68.7M in carbon tax revenues last year, netting $14M after payouts

The N.W.T government collected $68.7 million in carbon-tax revenue last year, generating $14 million in net revenue.

Those figures are included in the territory's 2023-2024 carbon tax report, tabled in the Legislative Assembly this week. The annual report details the territory's carbon pricing results for the year.  

The net revenue collected by the government is what's left of its carbon tax revenues after paying out various rebates and grants to residents, businesses and communities.

The $14 million in net revenue goes into the government's general funds, and some is intended to go toward various greenhouse gas (GHG) reduction projects and initiatives. According to the report, these include the Arctic Energy Alliance ($2.74 million) and the territory's Energy Action Plan ($2.15 million).

About 10 per cent of the net revenue — $1.5 million — went to the Community Government Sharing Grant, which was introduced in April 2023 for local governments to invest in emission-reduction projects. The funding is distributed based on population, meaning larger communities receive more.

Large emitters received 37% of revenue

Large emitters and mining operations, such as the Ekati, Diavik, and Gahcho Kué diamond mines, received $25.37 million in carbon tax rebates, which makes up about 37 per cent of the total revenues collected by the government. 

The large emitter grant program — where the territory set aside part of each mine's carbon taxes between 2019 and 2023 for emissions-reducing projects — has been discontinued this year. 

Last April, as national carbon prices increased, the N.W.T. government suspended its carbon tax on diesel heating fuel for a three-year period, ending in 2027. This was aimed at helping residents who use diesel to heat their homes. However, diesel used for vehicles is still subject to the carbon tax.

Regional variations in cost-of-living offset payments

The government paid $18 million in cost-of-living offset (COLO) payments to residents across the territory in 2023-24. 

The payments are now adjusted regionally, dividing the territory into three zones based on heating fuel use. Residents in colder, higher fuel-use areas receive more money.

• In 2022-2023, COLO benefits were $260 per adult and $300 per child.
• In 2023-2024, COLO payments increased to $441-$558 per adult and $493-$610 per child, depending on the zone.

A significant change this year is the elimination of the heating fuel rebate, which residents used to receive at the point of purchase. 

The report states that the increased COLO payments are meant to help cover the additional costs that residents now face.

Tax 'doesn't make sense,' policy analyst says 

Ken Coates, a northern public policy specialist and professor, says the N.W.T. government is doing "an admirable job trying to make sense of the revenue options."

"But they are also dealing with something ultimately beyond their control," he said.

He also said that reading the report made him "wish Canada wasn't going in this direction," of putting a price on carbon.

"Because, in the North, this just does not make a lot of sense," he said.

To Coates, carbon taxes are worsening an already difficult and expensive situation especially for people in remote communities. 

"People in the Northwest Territories, particularly in remote areas, know very well that the cost of diesel fuel is sky-high. It costs an enormous amount of their monthly income to actually just keep their house heated," Coates said.

While the government provides compensation and rebates, Coates argues that those "come nowhere close to matching up with the cost of energy in southern Canada."

Coates says that the N.W.T. lacks the infrastructure available in larger centres across Canada.

"We don't have transit systems. We don't have alternative energy systems like they do in the south… no nuclear power plants to reduce energy consumption and heating needs," Coates said.

Coates says when it comes to energy issues, the North should be seen as unique and distinct from the rest of Canada.