On Tuesday, the Houston government introduced amendments to the Environment Act in response to a federal government decision to begin raising the price of carbon to slow the pace of climate change. Across Canada, the price of a tonne of carbon will rise from $50 to $65 in January and increase by $15 a year until 2030.
The changes introduced by Environment Minister Tim Halman will require the largest producers of GHG emissions — namely Nova Scotia Power and cement manufacturer Lafarge Canada — to meet new performance standards to be set by the province and take effect Jan. 1, 2023. Failure to reduce emissions to that standard will trigger “paying a price” on the tonnes of carbon dioxide produced.
“I want to assure Nova Scotians that the government of Nova Scotia continues to hold large emitters accountable under the new federal regulations and at the same time, ensuring affordability for ratepayers,” said Tim Halman, Minister of Environment and Climate Change.
Halman estimates if Nova Scotia Power has to pay the federal price on its carbon emissions, ratepayers will be looking at an 8% increase on their power bill on top of what is already proposed — a 13. 7% jump over the next two years. That’s because Ottawa’s performance-based standards for companies that emit more than 50,000 tonnes of carbon a year treat treats all generating units in the province as one, without regard for individual differences. Halman estimates the made-in-Nova Scotia plan will result in a 2% increase in power rates. The plan is modelled on ones used in New Brunswick and Newfoundland.
Nova Scotia Power accounts for about 40% of all carbon emissions in the province; and pulp mills and other large manufacturers bring that total to 55%. Of the two dozen or so large emitters previously covered by cap-and-trade legislation over the past four years, some will have the choice of paying under the federal or provincial performance-based standards. Fuel suppliers such as Irving and Heritage Gas are not eligible and will pay the federal carbon tax.
.The Examiner asked Halman if he would commit to putting in legislation a clause that makes Nova Scotia Power shareholders responsible for failing to meet new performance standards for lower carbon emissions. Fines had been established in cap-and-trade legislation that is being phased out. When the power company failed to meet “caps” on prescribed GHG emissions between 2019-2022, the Houston government forgave penalties set out in the legislation worth $165.6 million.
The government’s rationale for granting the “GHG compliance relief” was to prevent those costs from being downloaded to ratepayers on their power bills. A generous gesture but it’s difficult to imagine why Nova Scotia Power would be any more “accountable” or compliant the next time unless government acts to put in writing a clause requiring those costs to be shouldered by shareholders.
(Such a clause was included in legislation governing renewable energy standards. If Nova Scotia Power doesn’t generate 40% of electricity by the end of 2022 from sources such as wind and hydro, shareholders are required to pay penalties that max out at around $10 million. The Houston government will soon have to make a decision on that one).
Halman did not confirm whether the government intends to make company shareholders responsible costs associated with non-compliance on new performance standards. He did say the amount collected from industry is estimated at $380 million by 2030. The minister said that amount will create the “Nova Scotia Climate Change Fund,” which will be used to continue investing in electric vehicle rebates and energy-efficiency programs similar to those offered now through Efficiency One and financed through selling carbon credits under cap-and-trade.
How will the carbon tax impact consumers?
These amendments are designed to deal with carbon pollution from Nova Scotia Power and the province’s largest manufacturers such as Lafarge, Michelin, and Port Hawkesbury Paper. While they may help insulate ratepayers from still larger rate hikes, they do not address the higher prices consumers will pay for home heating oil and for gasoline to fuel their vehicles. Nova Scotians haven’t paid a carbon tax. Halman was asked if the provincial government will provide rebates to consumers to help with these additional costs, if Nova Scotia is successful in convincing Ottawa to return 100% of the money so the province may distribute it.
Again, Halman did not provide a definitive yes or no, but indicated discussions are ongoing with the office of federal Environment Minister Steven Guilbeault.
“We continue to make it clear to the federal government that a federal consumer carbon tax is not needed in Nova Scotia to meet our federal emission targets, the most ambitious in Canada,” Halman said. “Was I surprised by how rigid they can be? Probably. But if they impose it, we want to recycle it because we know the province best.”
“The debate on the carbon tax has been — from my perspective — smoke and mirrors and it does a disservice to Nova Scotians who care about the cost of living and who care about the environment,” said NDP leader Claudia Chender. “We support a made-in-Nova-Scotia solution; the government has known this deadline was coming. They did not come up with a solution or they have chosen not to table the solution they came up with. But either way, this smoke and mirrors railing against a federal carbon tax when they know the federal government will impose it, is just a way of fomenting anger and dividing Nova Scotians.”
If Ottawa chooses not to hand over to Nova Scotia close to one billion dollars in carbon tax revenue by 2030 — probably a pretty good bet this close to January 1 — the Houston government could still attempt to negotiate to make sure the rebate Ottawa provides to households is adjusted to reflect actual costs here in Nova Scotia. The quarterly rebate is known as the ‘Climate Action Incentive Payment’ (CAIP) and gets paid to households below a certain income threshold in Ontario, Manitoba, Alberta, and Saskatchewan where the carbon tax is on heating fuel, gasoline, and electricity. Payments to consumers in Ontario are less than payments paid to people in Saskatchewan.
The CAIP currently takes into account the size and income of a household when sending out rebate cheques. But it does not currently take into account what fuel sources are available to households. In Nova Scotia, the majority of residences heat with oil or electricity — fuels that produce higher carbon emissions than hydro or natural gas, which are available to people in Ontario. The Examiner asked Halman if he has considered asking Ottawa to deliver a higher rebate — or CAIP — to eligible Nova Scotians than what is presently available to consumers in other provinces with access to greener fuel sources.
Halman’s answer was inconclusive: “We don’t feel a tax on gasoline and home heating fuel are appropriate in these inflationary times but make no mistake we will rigorously advocate on behalf of Nova Scotians.”
Time is ticking toward substantial new costs related to carbon and climate change, which are going to hit people hard in the pocketbook until energy consumption in the province starts to come down and coal-fired plants get retired.
This article has been revised to reflect the difference between a carbon tax and a carbon price.