Province proposes carbon tax on tiny fraction of emissions from big industrial polluters

The Higgs government is proposing a carbon tax on heavy industry that would give NB Power ratepayers a break and would dramatically lighten the financial burden on emitters that export most of their products.

The system would tax only 0.84 percent of greenhouse gas emissions from the province's biggest emitters this year, far below the 20 per cent in the existing federal system.

Environment Minister Jeff Carr called the plan "a balanced one that takes into account where we are as a province right now, our economic factors right now."

"We're in a volatile position right now with our jobs."

Carr said large exporters that sell into the U.S. market, such as the Irving Oil refinery in Saint John and several large forestry mills, can't afford to pass on to customers the extra cost of a big carbon tax.

Even so, he said the provincial levy on industry would still provide those plants with a financial incentive to lower emissions.

"If they invest in their own facilities and start lowering their emissions, good behaviour is rewarded by not having to pay it," he said.

Is Carr's plan too weak?

But environmentalist Lois Corbett of the Conservation Council of New Brunswick said by excluding more than 99 per cent of industrial emissions, Carr's plan is too weak to have an effect.

"Is it fair that large polluters get to dump their crap for free?" she asked reporters. She acknowledged the share of emissions subject to the tax will increase to 10 per cent by 2030.

"It will ratchet up over time and that's a good thing, but at the beginning we're starting out very slow and very free," Corbett said.

Emitters that go beyond the standard will have to pay, while those that stay below it can earn credits that can be sold to the high emitters.

The previous Gallant Liberal government opted to accept the federal plan for industrial emitters rather than develop its own.

But after taking office last November, the Progressive Conservatives committed to crafting their own system. It will go out for public input during the next month and must be finalized and submitted to Ottawa by July 31.

Carr and his officials say they're optimistic that it will win federal approval because it matches Ottawa's system in most respects.

It covers the same industrial sectors, applies to the same gases and applies the same price scale of $20 per tonne this year, rising to $50 per tonne in 2022.

Officials said the seemingly tiny fraction of emissions subject to the price this year is still more than Saskatchewan's model, which Ottawa approved.

"We feel as a whole that it checked off all the boxes," said Jeff Hoyt, executive director of the province's climate change secretariat.

The New Brunswick system also seeks to avoid hitting NB Power with big carbon-price costs that would lead to an additional six per cent hike on top of regular rate increases by 2022.

The plan divides the utility's fuel sources for its generating stations into three different categories and applies the tax differently to each of them. The province calculates that will translate into an extra rate impact of only one per cent by 2022.

Carr said the province wants to give NB Power credit for emissions reductions it has already made.

Hoyt acknowledged that the approach is "somewhat unique" and that no other province has seen such a system for electricity generation approved by Ottawa.

The province said the plan will reduce "emissions intensity" — the ratio of greenhouse gases relative to what the industrial plant producers — by 10 per cent by 2030. But the actual reduction in emissions will be smaller.

Even so, it would allow the province to reach the Paris climate goal of getting emissions to 30 per cent below 2005 levels. Emissions are already 28 per cent below those levels.