New Brunswick awaiting details on carbon tax to judge impact

One day after Ottawa promised to establish a mandatory carbon tax on greenhouse gases if substantial action is not taken on emissions in each province, there is widespread uncertainty about what that means for New Brunswick.

"We're really going to have to understand what the potential impact is," said Joel Richardson, vice president of Canadian Manufacturers and Exporters for New Brunswick and P.E.I. "There's some significant unanswered questions."

On Monday, Prime Minister Justin Trudeau said the federal government would be setting a price on carbon emissions of $10 per tonne in 2018 that will escalate to $50 per tonne by 2022, and provinces will have to abide by those numbers.

• Justin Trudeau gives provinces until 2018 to adopt carbon price plan

That could hit parts of New Brunswick's economy hard, or barely affect anything, depending on how the plan is applied.

According to Environment Canada, New Brunswick is home to the two largest greenhouse gas emitters east of Ontario: NB Power's coal fired generating station in Belledune and the Irving Oil refinery in Saint John.

Each released 2.8 million tonnes of greenhouse gases in 2014, amounts that would generate $140 million each in annual carbon costs by 2022 under the pricing plan announced by Trudeau.

Currently, NB Power's long-term financial plan involves keeping Belledune operating until 2044 as a core generating station on its system.

But if Belledune's greenhouse gas emissions are hit with an annual charge of $140 million, it will significantly injure the plant's viability.

Earlier this year, the utility told a legislature committee looking at climate change that retiring Belledune early to lower emissions, for example in 2030, would require a 38 per cent rate increase.

Similarly, a $140 million annual carbon bill levied on the Irving Oil refinery, which sells most of its product into the United States, could be a significant problem if its U.S. competitors do not face similar costs, according to Richardson.

"If we have new taxation in New Brunswick that is not being imposed on manufacturers in other jurisdictions, then you have to take a look at that to determine whether New Brunswick could even compete in selling those products anymore," he said.

Possibility of little effect

But it's not clear how carbon pricing announced by the prime minister will work, and that leaves open the possibility New Brunswick will feel little change.

The immediate purpose of a carbon price is to force provinces to meet emission reduction targets, which New Brunswick has largely done already.

The national goal is for provinces to drop their carbon emissions 30 per cent below where they were in 2005 by the end of 2030.

N.B. already has lowered carbon levels

But in the latest count of emissions in 2014, New Brunswick was already 27 per cent below 2005 levels thanks to the closure of fossil fuel-burning power plants in Grand Lake (2010) and Dalhousie (2012), and a significant drop in production at the oil-fired generating station in Coleson Cove.

Liberal MLA Andrew Harvey heads a legislative committee studying greenhouse gas reduction options New Brunswick can pursue, and said the province has already deeply reduced its carbon footprint.

"Our businesses have done a lot in New Brunswick — different sectors have done a lot over the years on their own," said Harvey, whose committee is scheduled to report at the end of this month.

Federal Liberal cabinet Minister Scott Brison has said that there will be "built-in flexibility to accommodate for the efforts that provincial governments have already undertaken."

However, in a statement released by New Brunswick Environment Minister Serge Rousselle, the province seems resigned to the idea that carbon pricing will be applied equally across the country, no matter what reductions have already been achieved.

"Any greenhouse gas reductions that have been made previously represent emissions that will not be taxed because they no longer occur," said Rousselle. "That is recognition of the progress already made."