Nova Scotia prepares carbon tax for large emitters

The Nova Scotia government is putting a carbon tax on pollution from Nova Scotia Power and cement-maker Lafarge, but it will not apply to gasoline and home heating fuel.

Environment Minister Tim Halman introduced amendments to the Environment Act on Tuesday at Province House. The changes would use the federal carbon price scheme to create a new "output-based pricing system" targeting Nova Scotia Power and Lafarge, the two largest greenhouse gas emitters in the province. It will be voluntary for smaller industrial polluters.

"We've arrived at a hybrid model, essentially, where we will have made-in-Nova Scotia performance standards," Halman told reporters during a briefing on the bill.

Companies that fail to meet performance standards would be subject to penalties.

The legislation focuses on industry and the electricity sector, which account for about half of the province's greenhouse gas emissions. Where the federal carbon tax, which Ottawa could impose on provinces without their own plans for pricing carbon, is expected to increase power rates by eight per cent, Halman said his government's program would limit rate increases to two per cent.

Tuesday's legislation would require approval from the federal cabinet before it can be put into effect, but Halman said his government has received a green light from Ottawa to proceed with the bill because it meets federal requirements for carbon pricing on large emitters.

"That's why we're confident to move this forward to the legislature, to get those foundational pieces in place."

Many of the legislation's details will be in regulations developed in the coming months. NDP Leader Claudia Chender said it's disappointing that the government could not provide more detail about how the system will work.

It's equally disappointing, she said, that it seems as though the government has left the issue of the carbon tax and its effect on gas and home heating fuel to Ottawa.

"The government has had a long time," she told reporters. "They've known this deadline was coming."

Liberal Leader Zach Churchill said it doesn't seem like the government was ever interested in finding a true agreement with Ottawa. He accused the government of "sitting on its hands," rather than doing the work required to meet federal standards.

The minister said the government would tackle the other major contributor to greenhouse gases in the province — transportation and the heating and cooling of buildings — through increased efficiency programs.

That effort will be aided by the creation of the Nova Scotia Climate Change Fund. It's expected to raise $380 million by 2030, said Halman, money that could be used for climate change adaptation, efficiency programing and possible rebates.

Since 2019, the province has priced pollution using a cap and trade system that applies to about 25 companies. But beginning in 2023, the federal price on carbon will move to $65 a tonne and increase annually by $15 until reaching $175 in 2030, something the cap and trade program could not achieve.

Although the output pricing system would only be a requirement for Nova Scotia Power and Lafarge because of their size, Halman said he expects other large emitters to voluntarily participate. That's because if they don't, they will be subject to the federal carbon tax.

"I believe that it's in their interest, not only from an environmental perspective but also from an economic perspective," he said.

Throughout the year, the Tories have lobbied Ottawa against imposing a carbon tax, but offered little in a plan that would have met the federal government's requirement for pricing carbon. Even with the legislation tabled Tuesday, Ottawa could still apply its carbon tax to the price of gas, diesel and home heating fuel.

Last month, Ottawa announced a $250-million home heating program in response to concerns from Atlantic premiers about how the carbon tax could disproportionately affect people who heat their homes with furnace oil.

Meanwhile, it appears the province and Ottawa are still at odds about how any money raised by the federal carbon tax will be spent. The federal minister has said money collected by Ottawa would be redistributed in the form of rebate cheques.

Halman and his government, however, continue to advocate for control over how that money is used.

"We know our province best."