Ottawa approves New Brunswick's carbon tax plan for consumers

The federal government has accepted New Brunswick's proposal for a carbon tax on consumers, making it likely that drivers in the province will pay less at the pumps starting next April 1.

Federal Environment Minister Jonathan Wilkinson said in a statement that Ottawa had approved the provincial plan, which has not been released publicly.

"I think that's good news and that's in keeping with the spirit and the intent of the pan-Canadian framework when it was developed," he told CBC News from Madrid, where he's attending an international climate-change conference.

New Brunswick Environment Minister Jeff Carr told reporters at the legislature that he'll introduce legislation to put the provincial tax into effect in the coming days.

"It is a good day here for New Brunswick," he said. 

Ottawa imposed its federal carbon tax, known as the backstop, on New Brunswick and three other provinces in April. It added 4.4 cents per litre plus HST to the price of gas.

Retreat complete

The four provinces had refused to bring in a carbon tax that complied with the Trudeau government's climate plan.

But after Trudeau's Liberals won the Oct. 21 federal election, Premier Blaine Higgs announced that he would fall in line with the federal plan. Higgs said with the federal Liberals winning the most votes in New Brunswick, it was a signal to move on.

Higgs and Carr said the New Brunswick proposal would be similar to Prince Edward Island's, which secured Ottawa's approval.

It applies a required 4.4-cents-a-litre provincial carbon tax at the pumps but reduces the provincial excise tax on gasoline by almost the same amount, leading to a net cost increase to consumers of only one cent per litre.

Ryan Remiorz/Canadian Press

That additional cost, though marginal, was enough to meet the federal requirement that gasoline be made more expensive to create an incentive for consumers to use less of it.

In New Brunswick, the federal backstop will be removed April 1 and replaced with the provincial system, which will charge less than Ottawa.

The federal requirement increases to $30 per tonne on that date, or 6.6 cents per litre, and it's not clear yet exactly what the net reduction will be. 

"Today it's a win for the consumers of New Brunswick, to be able to have our own model or price on pollution, our own carbon tax that can best be put to use to protect our consumers as well as invest in climate change initiatives," Carr said.

The agreement means New Brunswickers will no longer qualify for the federal rebate that is offered to residents of provinces where the federal backstop is in effect. 

Intervener status unclear

It also makes Higgs's Progressive Conservative government the first in Canada to sign on to the Trudeau climate plan after having opposed it.

But the agreement may only be a temporary reprieve. Under Ottawa's plan, the price must rise again in April 2021 and 2022. To stay in compliance, New Brunswick will have to increase its price as well.

Carr would not comment Wednesday on whether the province will remain an intervener in legal challenges by three other provinces to the constitutionality of the federal backstop.

A three-day hearing is scheduled next week in the Alberta Court of Appeal to hear that province's challenge to the regime.

Top courts in Ontario and Saskatchewan have already upheld the federal backstop but those rulings have been appealed to the Supreme Court of Canada. 

Graham Hughes/Canadian Press

Higgs said the province would remain a part of those challenges to clarify whether Ottawa has the constitutional jurisdiction to impose the federal backstop. 

Dieppe Liberal MLA Roger Melanson said the province should withdraw from those cases.

"Why would you keep intervening in front of the courts on something that you seem to be accepting?" he said. "Just move on and keep working on this file with the federal government. Don't spent money in the courts. It's not going to resolve anything." 

Ottawa is still deciding whether to accept the Higgs government's proposed industrial carbon levy on large emitters. 

It would initially tax only 0.84 percent of emissions, eventually rising to 10 percent, and create a special break for NB Power, a regime that environmentalists say would be too weak.