Carbon tax likely coming to N.S. after Ottawa dismisses Houston's alternative

Nova Scotia Premier Tim Houston might think he has a better approach than a carbon tax, but the federal environment minister disagrees.

Less than two weeks after the premier presented Ottawa with a plan to reduce greenhouse gas emissions based on existing legislation the province has on the books — and without any price on carbon — the federal minister responsible has informed Houston that the plan is not acceptable because it lacks a pollution pricing plan.

Steven Guilbeault writes in a letter dated Aug. 29 that pricing carbon pollution "remains a necessary and foundational pillar of the federal government's climate change plan."

"Since 2019, every jurisdiction in Canada has had a comparable price on carbon pollution aligned with common national stringency standards to ensure fairness and effectiveness. The federal government is committed to continuing to put a price on carbon pollution, with clear requirements that are implemented consistently across Canada and provide certainty to businesses and households."

The Halifax Chronicle Herald first reported on Guilbeault's letter to the premier.

N.S. proposal lacked a price on carbon, timelines

Guilbeault writes that putting a price on carbon pollution "is widely recognized as the most efficient means to drive innovation and energy efficiency in order to reduce greenhouse gas (GHG) emissions."

When Houston released a plan earlier this month he dubbed "better than a carbon tax," he said it was based on legislation his government passed last year to reduce greenhouse gas emissions and end the use of coal-fired plants to generate electricity by 2030.

But that legislation lacks concrete timelines other than the end date of 2030. The premier suggested Ottawa could monitor the province's progress, and institute a carbon tax if it determines in a few years that Nova Scotia is falling short.

Speaking to reporters via video conference from Whitehorse, where he is attending meetings with his provincial counterparts, Nova Scotia Environment Minister Tim Halman maintained the province does not need a carbon tax because of the significant measures outlined in last year's legislation.

"Nova Scotia over the next number of years has the potential to be a clean, green energy superpower," he said.

"Let's harness our energies into that as provincial and a federal government rather than imposing a carbon tax." 

N.S. government 'disappointed' with Ottawa's decision

Halman said he was disappointed with the decision by Ottawa.

"That is a really good plan to reduce greenhouse gas emissions, to maintain Nova Scotia's leadership in greenhouse gas reductions, and I can't help but feel a sense of a big missed opportunity here," he said.

The minister said the provincial government would regroup and evaluate next steps ahead of Friday's submission deadline for a provincially designed submission. It's not clear, however, what that could look like and how it would even be possible in such a short period of time.

Halman first said the province is hoping Ottawa will take a second look at Nova Scotia's proposal, before saying the province is "looking at all our options" ahead of the Sept. 2 deadline.

While the government does not fundamentally oppose a carbon tax, Halman said his government does not believe it is appropriate at a time of such high inflation.

Affordability concerns

The province needed to find a new path because the cap-and-trade system it's used since 2019, which targets large emitters, was set to expire. Because there were concerns that it would no longer be effective as the annual price on carbon continued to increase, the province was faced with coming up with its own approach or accepting the federal pricing model.

Houston's pitch to the federal government was based primarily on affordability. The province was concerned that the carbon tax would add 14 cents to the price of a litre of gas beginning next year. Guilbeault writes that he, too, is concerned about affordability and says pricing pollution is a tool that can be used to help make life more affordable.

"Provinces can use the proceeds from their carbon pollution pricing systems to support a range of goals and priorities," he writes.

"In provinces where the fuel charge component of the federal system applies, approximately eight out of 10 Canadians get more money back than they paid. Should the federal system apply in the province, Nova Scotians could expect to receive Climate Action Incentive payments via quarterly cheques totalling hundreds of dollars per year. Regarding the specific concerns you raised for rural Canadians, the federal approach adds an extra 10 per cent in money back for rural Canadians and special provisions for farmers."

The premier told reporters at a news conference earlier this month that he is skeptical about the suggestion that most families would get back more money than they pay out related to a carbon tax.

Not a reason to avoid a price on carbon

Houston tried to make the argument that he could spare Nova Scotians potential pain related to carbon pricing if the federal government was willing to support the province's efforts to further green its electricity grid and transportation system, the two largest contributors to GHGs in Nova Scotia.

Guilbeault writes in his letter that Ottawa will still be there to help on such projects.

The Atlantic Loop, a plan that would include upgrading transmission lines between Nova Scotia and New Brunswick to help bring clean hydro power from Quebec and Labrador into the region "is a shared priority for our respective governments and part of a larger collective initiative to transition Nova Scotia away from coal power and toward cleaner renewable energy sources," Guilbeault writes.

"However, this is not a reason to avoid having a price on pollution — a requirement in all jurisdictions under the Pan-Canadian Approach to Pricing Carbon Pollution."

Opposition not surprised by outcome

Nova Scotia Liberal Leader Zach Churchill said in a statement that Houston and his government missed the chance during the last year to develop a made-in-Nova Scotia approach that would have been acceptable to Ottawa.

"It was obvious when they made their announcement that Premier Houston was allowing a carbon tax to come to Nova Scotia when he submitted a faulty proposal to Ottawa," Churchill said in a news release.

"He knew what was at stake and he chose not to act. Now, Nova Scotians will be left to pay the price."

New Democrat MLA Lisa Lachance said the proposal the Tories submitted to Ottawa "lets big corporate polluters off the hook and deliberately ignores the federal carbon pricing requirement."

"[The premier] had the chance to show people we can tackle the climate crisis and make lives more affordable at the same time," Lachance said in a statement.

"Instead, the federal government has rejected his proposal leaving people wondering what is next. It's another wasted opportunity from the Houston government."

Halman said his government was open to looking at ways to price pollution for large industrial emitters, although no direct plans were mentioned in the submission to Ottawa.