Ecology North's Craig Scott on a carbon pricing plan for N.W.T.
'We'd like to have people understand more about this and not be scared of it'
Ecology North, an environmental group based in Yellowknife, is working on a draft plan for a carbon pricing system for the Northwest Territories. CBC News asked executive director Craig Scott to explain what carbon pricing is and how it could work in the N.W.T.
This interview has been edited and condensed.
Q. What is carbon pricing?
Carbon pricing is essentially putting a price on the use of carbon. What you do is use the current taxation structure and put a price per tonne which is collected by the finance department.
Q. Taxation on what exactly?
Any type of fuel we use is essentially a non-renewable fuel that we're mining out of the ground and it's not being replaced. We're releasing that into the atmosphere and when we do it's a source of pollution that affects everybody in the world.
In Canada, and in the N.W.T., we use a lot more fuel than other people in the world. In fact the N.W.T. is one of the highest per capita carbon dioxide emitters in the world. The Canadian average is 22 tonnes per person per year; N.W.T. is at 28 tonnes per person per year. That's because we live in a Northern environment and we have to heat our homes and travel more and fly more.
Q. Describe your proposal for a carbon tax.
We're modelling our carbon pricing scheme on what's happening in B.C., and it's interesting to note that Alberta has recently adopted a carbon pricing scheme as well. In B.C. they put in carbon pricing in 2010. It's been highly successful. It's very popular.
There's two ways that you can put a price on carbon. One is the cap and trade system, which is more complicated and involves large emitters. Carbon pricing puts a small portion on top of the price of the fuel that you'd pay. It's essentially a sin tax. You're saying carbon dioxide is a pollution that everyone should pay for.
We're recommending a carbon price of $10 a tonne, which is much lower than B.C. — right now it is at $30. Alberta's going to start at $30 and it will ramp up over the years.
What that will do is essentially create an extra $10 million in revenue for the government. Of that revenue, we're recommending that 50 per cent of it go straight back into the pockets of low income people, people who are struggling with high cost of living. The remaining 50 per cent would go into a fund to help people to reduce their fuel use. A $10 per tonne price is equivalent to two to 2.75 cents per litre of fuel.
Q. You mentioned B.C. as an example of where it has worked and a lot of people liked it, but our territory's very different. Can you use B.C. as a valid comparison?
I don't see it as being that different, especially when you look at northern B.C. They've got a big gas industry there, they've got a mix of electricity generation. They might have Vancouver and a couple of bigger cities but it's still Canada and it's not that much different from what we do. The price of gasoline and heating fuel there isn't that much different from what we pay.
We're probably more similar to Alberta, and Alberta's doing it.
Q. What do you think is the biggest misconception about carbon pricing?
People see it as a tax and people hate taxes. If you get the money back, it's not a tax. This is revenue neutral. People are actually going to get the money back in one form or another. You might not get the exact amount you put in back. You might get more if you reduce your energy use, or you might get less if you don't.
But people think it's just going to increase the cost of living. This has the potential to reduce the cost of living for people. The [previous federal] government has said over and over 'this is going to destroy the economy.' That's not the case. This is actually going to stimulate the economy and stimulate a new, cleaner and more sustainable economy for the N.W.T.
Q. We are having a hard time attracting people to do business here in our resource sector so wouldn't carbon pricing be a deterrent?
It's possible. But we're also talking about providing incentives so people and industry can reduce their emissions. The money will go back into people's pockets.
The other part is we're going to be required to do something. The new Liberal government said they were going to consult with every province and territory within 90 days to see what they're doing and what kind of carbon pricing they have, so we have to decide within the next year or so how we are going to proceed with a carbon pricing mechanism.
It's not a question of if we do this, it's a question of when. What we're trying to do is develop a system that works the best for the N.W.T.
Q. How would this affect people in smaller communities that have to spend more on fuel and transportation?
We haven't figured out exactly what the money going back out will be but a lot of the focus would be on people in high-cost situations or low-income situations where they might not have an option to change and we'd like to put more money back in their pockets so they're not negatively affected by this carbon price.
Q. What do you plan to do with your carbon pricing plan?
Finalize it then present it to MLAs and the general public and we'd like to have people understand more about this and not be scared of it. It's not a scary thing.