Newfoundland and Labrador's Minister of Environment says his province is still working on a plan to meet carbon pricing demands by Ottawa.

But one option is to continue, at least in part, what was supposed to be a temporary 16.5 cent a litre tax on gasoline, introduced in the April 2016 budget.

"Certainly, it's a logical option," Perry Trimper told CBC's Here & Now on Thursday. "We're working with those details now, but that's certainly an option we're considering."

Toronto gas prices Jan. 1 going up

Newfoundland and Labrador residents have been paying an extra 16.5 cents a litre on gas since April, to reduce the deficit. (CBC)

The province is required to take action on a carbon pricing plan by January of 2018, or Ottawa will impose a pollution penalty of $10 dollars a tonne, increasing that to $50 a tonne by 2022.

Trimper says he's looking for a locally-made solution.

"The last thing we want to do here is … make our industry less competitive," said Trimper, who said oil and gas companies working off Newfoundland have extra costs due to deep water and weather.

"To just take a carbon tax and apply it will make everything about the industry more expensive ... it would literally shorten the life of those fields."

Unique situation

The province is making an argument that it is unique, as 90 per cent of the population lives on an island and 45 communities rely on diesel for power.

"The only way we're going to get our goods and services here is through marine shipping. If you put a carbon tax on that situation, it just makes our goods and services all that much more expensive," said Trimper.

He said the province also feels it is paying an "implicit carbon tax" because residents will pay higher electricity bills to finance the Muskrat Falls project, which in itself reduces greenhouse gas emissions.

Representatives from Newfoundland and Labrador walked out of federal-provincial meetings in October, upset at the ultimatum from Prime Minister Justin Trudeau and the notion of a pan-Canadian carbon pricing plan.

Since then, Trimper said the province has been working on a strategy that would fit its own needs.

In June, the government introduced legislation to reduce emissions from onshore industries, and set up a fund — paid for by industry — to promote clean technology.

"We all have a genuine interest in hitting our targets … we still make our share of pollution," Trimper said.

Alberta introduced carbon tax plans in January, with a 4.5 cent a litre increase at the pumps. Ontario motorists are paying 4.3 cents a litre more.

With files from Peter Cowan