New report says federal carbon levy expected to cost most Nova Scotians more

Most Nova Scotians will be out of pocket when the federal price on carbon is applied to consumer fuels in July, Parliamentary Budget Officer Yves Giroux says.

Giroux released new estimates on the net cost of the levy on Thursday.

According to the analysis, Nova Scotians at the lowest end of the income scale are the only ones who will see more in rebates from Ottawa than they will pay out for the new price on carbon.

The federal government announced last year it would impose its levy on Nova Scotians for gas, diesel and home heating fuel after the provincial government refused to come up with a pricing mechanism of its own.

At the time, Environment and Climate Change Minister Steven Guilbeault said most people would receive more money through quarterly rebates than they would pay out as a result of the levy.

But Giroux's report brings that into question.

• Read the report by the PBO

• Ottawa unveils details of Nova Scotia carbon tax that will take effect next summer

In the first year, only the lowest of five income brackets would take in more through rebates than they pay out. The remaining four brackets would be out between $21 and $1,341, depending on income.

Those numbers are projected to increase through 2030-31. At that point, although the lowest income bracket would still come out ahead thanks to the rebates, the remaining four brackets stand to pay out between $215 and $4,368.

"Relative to household disposable income, the fiscal-only impact of the federal fuel charge is broadly progressive," says the report.

"That is, lower income households face lower net costs (larger net gains) compared to higher income households."

The report notes that revenue from Nova Scotia will be generated "almost entirely from household energy consumption, both directly and indirectly."

Ottawa and the Nova Scotia governments have announced a range of incentives to help people transition from heating their homes with oil in favour of heat pumps. 

Premier Tim Houston told reporters at Province House that the report confirms what his government has been saying all along — that a carbon price on consumer fuels would hurt most Nova Scotians.

"The carbon tax is a bad thing for Nova Scotians," he said. "It absolutely is."

Houston reaffirms position

As he has done since becoming premier, Houston reaffirmed his view that the province could meet aggressive environmental targets to reduce greenhouse gas emissions without a price on carbon.

It's an argument Ottawa has steadfastly rejected, saying if provinces did not want the federal levy they had to create their own pricing scheme.

Houston called on all Nova Scotia politicians to lobby the federal government to back down on the carbon levy. If Ottawa will not, he said, then it should be giving Nova Scotians more money to offset the effects of the price on carbon.

But Nova Scotia Liberal Party Leader Zach Churchill said any shortcomings the province faces as a result of the carbon levy amounts to a lack of leadership by Houston.

Churchill told reporters that the premier should have focused on negotiating a better deal with Ottawa, rather than fighting the process.

"The only thing he can do is stand up and blame the feds for this, when he did nothing to present an alternative to the carbon tax."

Churchill said the province could have found a way to revamp its self-designed, cap-and-trade system, which is about to expire. The province is moving away from that approach because it was shown to be unsustainable in the face of annual increases by Ottawa on the price of carbon. 

The province could have looked at expanding the market used for the North American cap-and-trade network in an effort to allow that approach to continue, said Churchill.

NDP Leader Claudia Chender said Houston's government successfully negotiated a made-in-Nova Scotia pricing plan for large industrial emitters, but failed to do similar work to protect Nova Scotians when it comes to a carbon price on consumer fuels.

"The federal government was very clear that they would and they could impose a carbon price if … the [provincial] government didn't come to the table and negotiate," she told reporters.

"And now we have to wear it."

A spokesperson for Guilbeault's office said no changes are anticipated to the value of quarterly rebate cheques that will go to Nova Scotians beginning in July.