Nova Scotia

N.S. government prepares carbon pricing plan for next 8 years

The province has 2 months to finalize its plans for how to price carbon for the next 8 years and submit that information to the federal government.

Environment and Climate Change Department officials considering 3 options

The Lafarge Canada cement plant in Brookfield is one of the industrial operators in Nova Scotia that participates in the province's cap-and-trade program. (Robert Short/CBC)

The Nova Scotia government has two months to finalize its plans for how to price carbon for the next eight years and submit that information to the federal government.

Since 2019, the province has used an in-house cap-and-trade system that targets large emitters of greenhouse gases. The four-year plan started with a price of $20 per tonne of carbon and has since fluctuated between $24-$36 per tonne.

The province is preparing to submit an eight-year plan to Ottawa, as required, this time with the more stringent pricing of an annual increase by $15 per tonne until reaching $170 per tonne in 2030.

Using the federal government's carbon pricing benchmark as a guide, the province is considering three options.

The first is to put a full price on carbon where a flat cost per tonne is applied at the point of sale. The second option is the provincially run cap-and-trade system that targets the largest GHG emitters. The remaining option is a hybrid approach that uses the federal government's tax on fuels as well as a performance standard that would be applied to industry, such as electricity generation and the creation of cement.

"The principle behind all of them though is that you're putting a price on carbon and that it's applied fairly and consistently across the country," Jason Hollett, the province's associate deputy minister of environment and climate change, told the legislature's public accounts committee on Wednesday.

"The tax itself provides a strong price signal that incents consumer reaction."

Revenue for mitigation efforts

An advantage of the cap-and-trade system, meanwhile, is that it creates revenue for the government to help with mitigation efforts. Since its launch, the province's cap-and-trade program has generated $73 million for a green fund, which has financed projects such as deep energy retrofits on affordable housing stock.

Hollett said one of the big differences between the federal model and the approach the province has used since 2019 is that with the federal tax, there are no GHG targets that the province would have to commit to meet over time.

"You pay the tax, you pay the fee, but emissions can go up over time if people are willing to pay the additional money to allow that to happen," he said.

Once the province submits its plan to Ottawa for approval, it would need to have the necessary regulatory changes in place to enact the new plan by the end of the year. Should the province opt to use a straight tax, that would need to be ready in time for April 1, 2023.



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