PCs' carbon-price plan for industry similar to Ottawa's, except for weaker emissions standards

The Higgs government is pitching a new carbon-pricing system for large industrial emitters that looks a lot like the federal plan it aims to replace.

The system would give large industrial emitters "a suite of flexible compliance options" aimed at hitting emissions targets without hurting their ability to compete, the province says. 

Many of those options — including a price on emissions that go above industry averages, and the earning and trading of emission credits — are strikingly similar to Ottawa's regime, which the previous Liberal government of Brian Gallant adopted.

The key difference appears to be a weaker standard for measuring emissions, one that Environment Minister Jeff Carr says recognizes that large industry in the province depends on export markets and can't afford measures that add too much to their costs.

The provincial threshold "would lead to industry being on a fair playing field with our neighbours and exporters in other jurisdictions around," Carr told reporters.

He said the large emitters would "still pay a small amount" under the Progressive Conservative system, but he wouldn't say how much.

"They will pay a little bit, and they're more than willing to pay their share and do their part," he said.

But a weaker standard could amount to almost a free pass for the 11 large emitters that will be subject to the rules, says Lois Corbett of the Conservation Council of New Brunswick.

"We don't need the huge industrial lobby in this province to prepare a secret, sweetheart deal that's unfair to taxpayers, unfair to other competing industries and just doesn't work to act on reducing carbon pollution," she said.

She said one possible outcome of a weaker industrial standard will be consumers paying the federal Liberal carbon tax at gas pumps starting April 1 while large industry pays nothing.

Carr's proposal is the latest step in the PC government's battle with the federal government over carbon taxes.

The previous Liberal government adopted its own pricing system for consumers that was ultimately rejected by the federal government because it didn't meet national criteria.

That's why Ottawa will impose its own carbon tax on New Brunswick consumers, including at gas pumps and on home heating oil and natural gas.

But for large industry, the Gallant Liberals adopted the federal rules, or "backstop," rather than craft its own pricing system.

The backstop would require large plants that exceed the average of emissions in their own sectors — called a "performance standard" — to pay levies. Plants that stay below the sector average would earn credits they could sell to emitters that are above the average.

The federal rules took effect Jan. 1, but Ottawa is still finalizing its details. Industrial facilities will only pay or earn credits for their 2019 emissions sometime next year.

Even so, Carr said, the cost to industry "puts us at a serious disadvantage" compared to what plants in other provinces will pay.  And some of those costs will be passed down to consumers, he said. 

NB Power, for example, has warned that a carbon price on its emissions could force it to raise power rates to consumers.

Carr wouldn't say exactly what the overall cost of his provincial alternative would be to industry.

Corbett said that with neither the federal and provincial performance standards finalized, it's too early to compare the two.

"Which regulation will be tougher for a pulp mill or an oil refinery is yet to be seen, because we've seen neither the national plan nor the provincial plan," she said. "That's what we all need to watch out for."

Carr's documents say the province will design a New Brunswick-specific performance standard that will "consider emissions intensity and trade exposure." 

"Emissions intensity" measures the level of greenhouse gases relative to a plant's output. If the plant becomes more productive, it's possible for the emission intensity to go down even if the emissions themselves increase.

Corbett called that "a gift to industry" because it doesn't necessarily lead to actual emissions reductions.

The PC-created plan will apply to industrial facilities that emit more than 50,000 tonnes of greenhouse gases per year.

Among the plants that fall into that category are the Irving Oil refinery, several NB Power generating stations and several forestry mills.

One option available to large emitters is to "contribute" to the province's climate change fund at rates matching the federal government's carbon-price schedule: $20 per tonne this year, rising to $50 per tonne by 2022.

It's not clear whether the federal government will approve the plan. If it's rejected, New Brunswick would have to stick with the federal backstop.

At the same time that it's trying to develop a system that meets federal requirements, the Higgs government is challenging the constitutionality of the federal carbon price in court.