New Brunswick

Holt says 'pause' on industrial carbon tax overhaul is over

Premier Susan Holt will resume work on New Brunswick's industrial carbon pricing system now that the federal election is over. Holt had paused efforts because the approaches of the two main parties were so different.

Liberal election win means federal standard will stay, forcing N.B.'s hand on redesigning pricing system

Woman with shoulder length hair and blue sweater.
After a bit of a pause during the election, Premier Susan Holt says work will resume on developing a new industrial carbon price for New Brunswick’s biggest emitters of greenhouse gases. (Mikael Mayer/Radio-Canada)

This week's Liberal victory in the federal election means Premier Susan Holt will have to un-pause her work on a new industrial carbon price for New Brunswick's biggest emitters of greenhouse gases.

Holt acknowledged Thursday that she had shifted her own campaign commitment to a more "robust" industrial carbon tax into slow gear until it was clear who would form the government in Ottawa. 

Conservative Leader Pierre Poilievre was promising to scrap the federal pricing standard for industry, while the Liberals under Mark Carney said they would "keep and strengthen" it, though with changes.

"We did have a bit of a pause, I'll say, or a slowdown of the work on what New Brunswick's approach to emissions and climate would be, given we weren't clear on what the federal direction would be," she said.

"Now that the election is finished, we can expect to see a clear sense of where this government is going to go on an emissions cap and the federal price."

Carney said during the federal campaign that there is "a value to that industrial carbon tax in the predictability of that tax and the certainty around it."

Under the national carbon pricing law, provinces can design their own systems as long as they meet federal pricing requirements.

Made-in-N.B. approach

The Higgs government developed its own system in 2019, known as an "output-based pricing system," which won federal approval in 2020.

It sets a specific emission standard per unit of production — or "output" — for each of the 15 largest polluters in the province and requires them to reduce emissions by two per cent of the standard each year, until they reach 82 per cent of the standard in 2030. 

The tax applies only to a small portion of emissions, an element that has been criticized by environmentalists who want to see more incentives to get emissions down faster.

WATCH | 'A bit of a pause': Holt on industrial carbon price:

Carney’s win forces Holt’s hand on industrial carbon tax

6 days ago
Duration 2:33
New Brunswick Premier Susan Holt said work on a more ‘robust’ pricing system was on pause, but will now move forward.

Holt said last year during the provincial election that the provincial price "needs to be robust."

She said large industrial emitters wanted a system that "is both more stringent in terms of emissions but also more rewarding in terms of incentives to reduce emissions."

Emitters must buy a credit for every tonne of greenhouse gases they emit above their yearly intensity target.

Plants that emit less than their cap earn one performance credit for each tonne they stay below the target, and they can sell those credits to the plants that go over.

The other option, provincially issued "fund credits," generate revenue that goes into a pool the government will use to subsidize emissions-reduction projects by the 15 large emitters.

Figures released  by the province last spring showed that in the first two years of the system, 2020 and 2021, the 15 big emitters subject to the tax bought far more credits than they sold, indicating that most were exceeding their reduction targets. 

Holt "needs to increase the coverage so that instead of 10 per cent of the emissions being priced, we finally eventually get to 100 per cent of the emissions being priced," Green Leader David Coon said.

He also called for the price per unit to be higher and for the government to return revenue from the credit sales to consumers. 

The Irving Refinery
Irving Oil's Saint John refinery is New Brunswick's largest source of greenhouse gas emissions and has launched a range of emissions-reduction projects. (CBC)

The revenue is now used to subsidize efforts by the big emitters themselves to lower emissions. 

Carney said during his campaign that his government would like to see the industrial carbon tax revenue go to consumers, "using money from polluters to pay citizens who reduce their footprints."

The entire national climate plan is scheduled to be reviewed by the federal and provincial governments starting next year, though some are calling for it to happen sooner.

"I think what we need is some sort of decisive movement toward bringing some clarity to these systems, and that is at both orders of government," said Dale Beugin, the executive vice-president of the Canadian Climate Institute, a research think-tank.

"Updating and fixing the federal benchmark to define the minimum standards for industrial pricing in the provinces is going to be a big priority, and it should be a big priority. It's an important policy and it needs to work to its full potential."

Holt released a three-page letter to Carney Thursday that outlined seven priorities her government would like to discuss with the prime minister.

The letter mentioned developing new sources of clean, non-emitting electricity but did not refer to carbon pricing or emissions reductions.

In her State of the Province speech in January, Holt set a goal of reducing greenhouse gas emissions — relative to provincial economic growth — by 11 to 21 per cent by 2028. 

But she said that would have to be balanced "somewhat" with the economic uncertainty some emitters face around tariffs on their exports to the United States. 

"We're building under that framework, but we need a bit more time before we get the next level of clarity from the federal government before we can finalize how New Brunswick is going to align with that." 

ABOUT THE AUTHOR

Jacques Poitras

Provincial Affairs reporter

Jacques Poitras has been CBC's provincial affairs reporter in New Brunswick since 2000. He grew up in Moncton and covered Parliament in Ottawa for the New Brunswick Telegraph-Journal. He has reported on every New Brunswick election since 1995 and won awards from the Radio Television Digital News Association, the National Newspaper Awards and Amnesty International. He is also the author of five non-fiction books about New Brunswick politics and history.