Nova Scotia's premier says New Brunswick and the other Atlantic provinces are in discussions to join his government's new cap-and-trade system.

Stephen McNeil says if the three other provinces can live with the model Nova Scotia has set up, they're welcome to join.

Nova Scotia Premier Stephen McNeil

Premier Stephen McNeil says he's in discussions with the other three Atlantic provinces about the new cap-and-trade system. (Canadian Press)

"We're entered into talking to the other provinces to see if we could potentially do a regional one," McNeil told reporters in Halifax Thursday.

"We're giving them access to what our negotiations were and what our negotiations continue to be. If if works, we'll do an Atlantic model. If it doesn't, we'll continue on our own model."

The comments come just a day after Nova Scotia released a report on cap-and-trade design options that seemed to rule out a regional system.

The report said the province was proposing "that there be no transfers of emissions in or out of the province; therefore, we do not plan to link with a cap and trade program in another jurisdiction at this time."

Credits earned under cap

A cap-and-trade system involves the government setting a cap on emissions. Emitters that stay under the cap earn credits that they can sell to emitters who go over the cap.

But Nova Scotia says it will distribute carbon credits "at no cost" to make the system less expensive for companies.

"It also helps address competitiveness and trade concerns and give companies time to invest in efficiency and adopt newer technology," according to its options report.

A regional system would give both buyers and sellers of emissions a larger pool of emitters to trade with.

N.B. undecided

The New Brunswick government of Brian Gallant hasn't said yet whether it will adopt a carbon tax or a cap-and-trade system in time for next year.

si-serge-rousselle

The Liberal government has not indicated what option New Brunswick will implement - carbon tax or a cap-and-trade system. (CBC)

When the Liberals released their climate plan last December, Environment Minister Serge Rousselle left the door open to joining a regional cap-and-trade plan.

"We have to look at what our neighbours are doing, but at the end of the day, we have to find the solution, the option, that is best for the province," he said.

The federal government says provinces must adopt some kind of carbon price by 2018 or else have one imposed on them by Ottawa.

Nova Scotia signed a special agreement with Ottawa last year that recognizes the province has already reduced emissions. It allows the province to keep burning coal past a 2030 phase-out date in return for emissions reductions in other areas.

Louise Comeau of the Conservation Council of New Brunswick said in December it's hard for a small province to develop its own cap-and-trade system in isolation, because there needs to be a lot of buyers and sellers for a carbon credit market to work properly.