Liberals' sleight-of-hand carbon tax formally proposed in climate bill

New Brunswickers will start paying a 2.33-cent-per-litre carbon tax in April, but it's unlikely they will notice.

That's because the Brian Gallant government won't add that to existing taxes already paid at the pump, but will shift that amount from the existing 15.5-cent-per litre gas tax.

That means no net increase on the price of gas.

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The measure was included in the Liberals' Climate Change Act introduced in the legislature Thursday morning.

The redirected money will go into a fund that will pay for government programs designed to reduce carbon dioxide emissions.

"We'll use the money to combat climate change," said Environment Minister Serge Rousselle. "We'll use different ways — energy efficiency, things like that — and that, with the federal standards on industrial emitters, will be a start."

A financial incentive

Economists who support carbon taxes say raising the cost of fossil-fuel consumption creates a financial incentive to consume less of it. Other provinces have cited that logic in introducing new carbon taxes.

But the Liberal sleight-of-hand means the price of gas in New Brunswick will stay the same.

Officials say adding a new 2.33-cent tax on top of existing taxes would not be enough to push New Brunswickers to burn less gas, particularly when they have few transportation options.

It will be more effective to fund programs that reduce carbon consumption, they said.

The share of the 15.5-cent gas tax to be turned into a carbon tax will grow from 2.33 cents in 2018-19 to 11.64 cents in 2022-23.

The increase is designed to meet the federal government's requirement that provincial carbon prices rise from $10 per tonne of carbon dioxide next year to $50 per tonne five years later.

Feds to impose additional carbon pricing

There were immediate questions about whether Ottawa would accept the shifting of existing tax money into a carbon tax.

"In the Paris agreement, the federal government, along with all the other nations of the world, said they would only count measures that were in addition to [existing measures]," said Lois Corbett, the executive director of the Conservation Council of New Brunswick.

"This is obviously not an additional move. This is a reshuffling on the decks. That might be a stickler."

The federal government has promised to step in and impose additional carbon pricing in provinces whose systems don't meet the national standards.

Green Party Leader David Coon predicted if the Liberals are re-elected, they will change the legislation to create an additional carbon tax on top of the gas tax.

"They're not going to continue to whittle away the revenue from the gas tax. I know that's what they're saying, but I don't believe them. It doesn't make any sense to me. That's not a price on carbon."

NDP Leader Jennifer McKenzie also denounced the shift, calling instead for a separate carbon tax with a rebate for low-income New Brunswickers.

Misses bar, activists say

Environmental Defence, a national activist group, also said the plan "fails to meet the bar" set by the federal government and called on Ottawa to impose stricter carbon pricing in New Brunswick.

Opposition Progressive Conservative MLA Bruce Fitch, meanwhile, said the Liberals were contradicting their own statements from last year that a higher price on carbon was needed.

He said Rousselle's legislation amounts to requiring people to burn more gasoline so there's more money in the climate fund to pay for emissions reductions.

The shifted gas tax money in the climate fund will total $37.4 million next year, rising to $180.2 million in 2022-23.

The legislation lists eligible programs that the money can be spent on and requires the province to report each year on how the money is being spent.

For now this is exactly where we believe we should be.- Serge Rousselle, Environment Minister

Gobbling up $180 million in 2022-23 for climate programs will leave the province with less revenue to spend elsewhere.

But Rousselle said that because the Liberals will make the deficit "disappear" by 2021, the government will have room in its budget for shifting gas tax revenue to the climate fund.

The "repurposed" carbon tax will only apply to transportation, not to fossil fuels such as natural gas that are used to heat homes.

Smaller businesses in sectors such as marine transport, fisheries, forestry, mining, aquaculture, silviculture and agriculture will get to apply their existing gas-tax deductions to the shifting carbon tax.

Thursday's legislation also lets the province sign an agreement with Ottawa to apply the federal industrial carbon levy on large emitters in New Brunswick.

According to the Conservation Council, those large emitters include several large pulp and paper mills, the Irving Oil refinery in Saint John, the Canaport LNG terminal, the Glencore Canada smelter in Belledune, NB Power generating stations in Belledune and Coleson Cove, and Emera's Bayside Power plant.

Stricter  rules down the road

Under the federal regime, emissions reductions at those plants will be compared to similar facilities elsewhere. Facilities who reduce the emissions the most won't have to pay the levy.

Specifics of that system will not be finalized by Ottawa until 2019.

Rousselle would not rule out making the rules more stringent in the future if the province is not on track to meet its targets.

"We're certainly confident that what we're proposing for the next years is a good starting point," Rousselle said. "For now this is exactly where we believe we should be."

New Brunswick had already hit its own 2020 emissions-reduction goal, a 35 per cent reduction from 1990 emissions levels.

The province has also seen emissions decline enough to hit the Paris climate agreement's 2030 goal of a 30 per cent reduction from 2005 emission levels.