How will carbon pricing affect my business and what can I do about it?
Contributions from Anna De Paoli & Gino De Paoli
Since January 1, 2017 consumers in Alberta have been subject to the carbon levy. This was a well publicised measure by the Government of Alberta, but the true impacts are only now being felt. There are businesses who are able to pass the costs on to their consumers, and others who are not and are feeling a direct impact on their bottom line.
The summary of the carbon pricing for 2017 and 2018 is as follows:
*Marked fuels, (diesel and gasoline) for Agricultural purposes are exempt.
The question we have been asked by a number of businesses is, “what can we do about the carbon levy?” In answer we offer the following:
In some cases, these cost increases are clearly demarcated, such as on natural gas bills, where you will now see a “carbon levy” line item. We are also seeing haulier changing a new surcharge in their freight rates, specifically related to the carbon levy. For other items, like electricity, the carbon levy is not seen as a line item. Power generators pay the carbon levy via the Specified Gas Emitters Regulation, which will be replaced by a Output based allocation system in 2018. The details of this are still to be finalised.
- Understand your energy consumption and the carbon levy impact on your bottom line. Break out your natural gas, power and fuel usages. What are your top 5 consumers and is your usage increasing over time, is this controllable?
In many cases, we have found that energy costs are not well understood, even in larger industrial facilities. They are a line item in a budget but that is the end of the story. As prices rise from their current historic lows, the “cost of doing business” will increase. With the addition of the carbon levy, the need for efficiency is increasing. The first step on the journey is understanding consumption. To do this there are both commercial and technical strategies.
- Do you have an energy procurement strategy? How do you purchase utilities and fuel? Is your pricing competitive?
- Understand your operations and look for ways to reduce consumption. This can involve a review of your facility operations and maintenance program and ensuring that utility distribution sizing correctly meets the needs of your current operations.
- Are there grant programs available to help reduce energy consumption? There are currently a suite of programs available to assist with energy efficiency for business and not-for-profit organisations. Energy Efficiency Alberta’s Business, Non-Profit, and Institutional Energy Savings Program has a list of potential rebate items. For farming operations, there are also Growing Forward 2 grant programs are also available. Sadly, the On-farm energy management program is not currently accepting applications due to the high demands on this program. However, we are hopeful that it will return. Finally, we are often asked about solar power economics and programs. Since March of 2017 the On Farm Photovoltaics – On Farm Management Sub-Program has been giving rebates to any new or any pre-existing solar powered system built after April 1, 2013. The grants are calculated based on an eligible system’s nominal wattage, up to a maximum percentage of system cost. Third-party contractor-installed systems are funded at a higher rate than self-installed systems. A maximum of 100 kW of solar PV or capacity $50,000 per applicant is available through the program. Any Alberta Producer with a minimum of $10,000 farm commodity or livestock production income is eligible for these programs. For commercial and industrial operations, Energy Efficiency Alberta will also be launching a program in the coming months. Another one to watch for.
To find out more on Energy Rebate Programs that apply to you follow the link.
If you have questions or need help getting started or finding resources we would be happy to assist. You can reach us at info@dpaconsulting.ca
