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The Carbon Tax and Emitters

December 23, 2019

The Carbon Tax and Emitters

4 Minute Read

Learn who qualifies as an emitter under the federal carbon tax and what the program means for them.

Jeff Harrison
Jeff Harrison, CPA, CMA
Partner - Indirect Tax

Registration as an emitter will not apply to most businesses. This registration type applies only to the businesses participating in the federal Output Based Pricing System (OBPS), widely recognized as the Canadian Cap and Trade system for greenhouse gas emissions.

Registration Required

Unlike other registration requirements under the carbon tax, an emitter does not appear to require mandatory registration. Voluntary registration is still eligible. Registration was first available April 1, 2019.

Voluntary Registration

A person can register as an emitter voluntarily if the person is, for purposes of the industrial greenhouse gas emissions rules, a person responsible for a covered facility and the person has been issued a covered facility certificate by the Minister of Environment and Climate Change Canada (ECCC) in respect of the covered facility.

The person may also have more than one covered facility.

A covered facility is a larger emitter and has already been identified as such under the OPBS and having reported to Canada’s Greenhouse Gas Reporting Program (GHGRP) having 50 kilotons (kt) of carbon dioxide emissions annually between 2014 and 2017. There are believed to be 133 such facilities as of 2019. A smaller facility can apply to obtain this certification where reported annual emissions to the GHGRP, for any calendar year, starting in 2017, of at least 10 kt but less than 50 kt of carbon dioxide emissions.

As with the registration system, the emitter could be registered for a different part of the program such as being a road/rail carrier, a distributor, etc. The registration is in accordance with why they were registered. If the emitter is registered as a road carrier, for example, but not as an emitter, the fuel charge is in relation to the fuel charge related to the fuel in the supply tank coming into or leaving a federally regulated province. It could not issue an exemption certificate in relation to being a registered emitter to acquire the fuel on a relieved basis.

Other Types of Registration

A person applying for registration as an emitter may also qualify as:

  • A registered distributor,
  • A registered road carrier,
  • A registered user of fuel in a non-covered activity, or
  • A registered user of combustible waste

Review these registration types to see if they apply to you.

Fuel Charge

An emitter that is not registered for the carbon tax does not remit the fuel charge. The registered distributor delivering and / or selling the fuel to the emitter will remit the fuel charge.

If the emitter is registered, they would issue an exemption certificate to the registered distributor. The registered emitter would remit the fuel charge accordingly.

Fuel Charge Calculation

The fuel charge is calculated as A x B, where:

A = quantity of fuel on which the fuel charge is to be applied

B = the rate for that fuel type at the time the charge becomes payable

20,000 litres of diesel x $0.0537/ litre = $1,074

This amount could be reduced further by any eligible rebates.


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