Federal carbon pricing to take effect in Nova Scotia, P.E.I. and Newfoundland and Labrador

The federal government is imposing its fuel charge — commonly called the carbon tax — on consumers in Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

Environment and Climate Change Minister Steven Guilbeault said Tuesday that although Ottawa will begin imposing its federal carbon backstop on these provinces, it will not kick in until Canada Day, long after winter has passed.

"We are in a federation and we have to be able to take into account different regional realities in the country. And that's exactly what we've done with our system," Guilbeault said.

"What we are trying to do is create more fairness across the board and to ensure that what every jurisdiction is doing, whether they have their own system or are using the federal system, is equivalent and passes a federal benchmark."

Provincial plans to price carbon submitted to the federal government by Nova Scotia, Prince Edward Island and Newfoundland and Labrador were deemed to have fallen short of the federal benchmark for emissions reductions.

Those three provinces will join Alberta, Saskatchewan, Manitoba and Ontario under the federal backstop. New Brunswick, Quebec, the Northwest Territories and B.C. will continue to oversee their own carbon pricing systems.

The federal price will take effect on July 1 and consumer rebates — the federal government's tax-free Climate Action Incentive Payments (CAIP) — are expected to arrive within weeks of that.

Quarterly CAIP payments typically arrive in January, April, July and October — part of the federal government's plan to return 90 per cent of the money it collects through the carbon tax.

Federal officials speaking on background said the July payment will net $248 for Nova Scotia residents, $240 for P.E.I. residents and $328 for residents of Newfoundland and Labrador. Payments in the same amounts will also be issued in October and January 2024.

Difficult negotiations

The federal carbon pricing system is divided into the fuel charge — which affects consumers — and the Output-Based Pricing System, which determines the cost of emissions from the industrial sector.

Guilbeault also announced Tuesday that the federal government has accepted Saskatchewan's proposal to put a price on its industrial emissions.

It means that Saskatchewan joins Alberta., B.C., New Brunswick, Newfoundland, the Northwest Territories, Nova Scotia, Ontario and Quebec in running its own industrial carbon pricing system. The federal government's industrial carbon pricing system will continue in place in Manitoba, P.E.I., Yukon and Nunavut.

Guilbeault said that while negotiating industrial emissions was "rather smooth" with most provinces — including Alberta and Saskatchewan — that was not the case for discussions with Nova Scotia Premier Tim Houston. Guilbeault said those talks were filled with "theatre and drama."

"I must confess that the discussions with Nova Scotia have been interesting," Guilbeault said. "All of this drama could have been avoided. I guess they wanted the drama, they were looking for it."

Guilbeault said that while he is not popular in Alberta and Saskatchewan, negotiating with those provinces was free from drama and tension. He suggested that while Houston is a Progressive Conservative, the premier and environment minister must not have "the same definition of what progressive means."

Guilbeault also said he is not sure why negotiating industrial emissions has been so much easier than negotiating a price for consumer emissions.

"I am not sure why some provinces are choosing to agree that we need to put a price on pollution for industrial users but that we shouldn't be putting a price on fuel that we use in our everyday lives," he said.

$5,000 heat pump grant

After the carbon pricing announcement, Houston issued a statement saying he's disappointed that the federal backstop is being applied in his province.

"Let me be clear — Nova Scotia supports action on climate change, but doesn't support a carbon tax of any amount on home heating oil at this time," he said.

"The courts have ruled that the federal government has the jurisdiction to apply the carbon tax. We don't dispute that. But the courts didn't say the federal government is required to impose it."

Tuesday's announcement comes a day after the federal government announced an upfront grant of up to $5,000 to help low- to medium-income households switch from oil furnaces to heat pumps.

The carbon price currently sits at $50 per tonne of emissions; it's expected to rise to $65 per tonne in 2023 before reaching $170 per tonne in 2030.

In principle, carbon pricing factors in the total costs of rising greenhouse gas emissions — wildfires, heat waves, droughts and loss of property from flooding. By attaching these costs to burning fossil fuels, governments hope to make it easier and cheaper over time for businesses and consumers to choose low-carbon options.

The Liberal government calls carbon pricing the most efficient way to price pollution and drive clean innovation.

According to the World Bank, 68 national or subnational carbon pricing initiatives cover about 20 per cent of global emissions.