Ottawa unveils details of Nova Scotia carbon tax that will take effect next summer

Ottawa will impose a carbon tax on consumer fuels in Nova Scotia next year after the provincial government refused to develop its own pricing scheme, a decision the federal environment minister said baffled him.

Steven Guilbeault delivered the details during a news conference in Ottawa on Tuesday. Nova Scotians can expect the price of a litre of gas to increase by about 13 cents, while home heating fuel will go up by about 15 cents per litre. Guilbeault said those increases would be offset for most people by quarterly rebate cheques that will begin going out in July.

The tax on gasoline, diesel and home heating fuel will come into effect in Nova Scotia on July 1, 2023, as well as in Prince Edward Island and Newfoundland and Labrador, meaning it will miss the upcoming heating season. The cheques from Ottawa will be issued automatically since there is no application process. A family of four in Nova Scotia will receive $248 each cheque, or $992 per year.

There is a 10 per cent top-up for people who live in rural communities, based on their postal code. In Nova Scotia, that is everywhere outside the Halifax metropolitan census area. The tax will not apply to fuel used for farming and fishing.

Ottawa's move comes after Premier Tim Houston and his government declined to submit a plan of their own to price consumer fuels, although their plan for pricing large industrial emitters was accepted. Guilbeault said he was "extremely disappointed" by his dealings with the Nova Scotia government.

"I'm not super popular in Alberta and Saskatchewan," he told reporters, "and yet we were able quickly to come to agreement with these provinces and there was no drama in the media about this. They really wanted to ensure that they could have their own system."

Guilbeault noted that Houston makes the distinction that he is a Progressive Conservative.

"It's interesting that we had an easier time negotiating this with Conservative governments in Alberta and Saskatchewan than we did in Nova Scotia. I guess we don't have the same definition of what progressive means."

Last-minute request

Houston wrote to Guilbeault late Monday asking him one last time to reconsider imposing the federal tax. The minister said the premier's approach is "unconscionable," particularly given the severe effects Atlantic provinces recently experienced from post-tropical storm Fiona.

In an interview, Nova Scotia Environment Minster Tim Halman said he was disappointed with Ottawa's decision. He said he thinks Guilbeault's comments are unfair and that the federal government missed an opportunity to find another way to address climate change without the tax.

"I don't like those comments," he said. "The Nova Scotia government has put forward practical, realistic alternatives."

Halman said the nature of federalism is that there should be give and take between Ottawa and the provincial governments.

"We don't want Ottawa simply to dictate policy to us because we know the intricate details of Nova Scotia. We're the provincial government."

In a statement, Houston said his government is looking at ways to expand the heating assistance rebate program and looking at other "long-term solutions" to increase energy efficiency and make life more affordable.

'A political wedge issue'

Opposition leaders in Nova Scotia said the premier has only himself to blame for the impact that is headed for the province because of Houston's unwillingness to try to workout a deal that would satisfy Ottawa's requirement for a price on carbon while finding an approach that could save people money at the pumps.

"The Houston government had the opportunity to negotiate a better deal that would have done Nova Scotia's part to reduce carbon emissions while keeping costs low for Nova Scotians," Liberal Leader Zach Churchill said in a statement.

"Instead, our province will be left with a plan that does less for the environment and costs people more."

NDP Leader Claudia Chender said Houston played chicken with the federal government and lost.

"This issue is so important that we should all be working together to find the best solutions possible for our children, grandchildren and the planet," Chender said in a statement.

"Making this a political wedge issue and using it to fundraise is not what families were asking for. Putting a price on carbon is a reality, what people need is a government who will work across political parties and levels of government to find a way to protect the environment and make life affordable for families."

Nova Scotia initially tried to convince Ottawa that there was no need for a price on carbon of any kind because of legislated targets which stipulate the province has to increase the use of renewable energy and stop using coal to generate electricity by 2030.

Guilbeault was unmoved by that suggestion, saying a price on carbon needs to be a national policy.

The Houston government ultimately submitted what amounted to half a plan, with its proposal to price carbon for large industrial emitters, including Nova Scotia Power and the Lafarge cement plant. The acceptance of that plan by Ottawa is significant because it will mean an increase in power rates of two per cent rather than the eight per cent anticipated if the federal carbon tax were applied to Nova Scotia Power.

Although Houston and his government remained steadfast that they would not apply a price on carbon to consumer fuels, the premier and Halman lobbied Ottawa to have the final say on how proceeds raised by the federal backstop would be used.

That proposal was also rejected. Officials from Ottawa said only provinces that willingly accepted the federal carbon tax by Sept. 2 were given the ability to control the proceeds from the policy.

Ironically, Nova Scotia bureaucrats were advocating for acceptance of the federal carbon tax even before Houston and the Tories formed government last year.

Documents obtained by CBC and AllNovaScotia earlier this year showed the carbon tax was favoured because of the amount of money it could generate for the province: $1.1 billion.

Carbon price set to rise

Since 2019, Nova Scotia has priced carbon using a cap and trade system. That has largely protected the province from the spike in fuel prices experienced in other provinces where a carbon tax was already in place. The limits of the cap and trade system are being tested, however, as Ottawa increases the requirements for carbon pricing.

The price goes from the current $50 per tonne to $65 in 2023, and then increases by $15 annually until it hits $170 per tonne in 2030.

Rebate cheques issued by the government will increase each year to offset the corresponding increase in the price on carbon.

On Monday, the federal government announced it is doubling the amount of money available for people to switch from heating their homes with oil to more efficient electric heat pumps.

There is $250 million (half of which is earmarked for Atlantic Canada) that low- and moderate-income households can access up front to offset fees, and $250 million (half of which is designated for Atlantic Canada) that can be accessed after the installation is complete.

Federal officials say the two programs can be combined for qualifying applicants.

Guilbeault said switching from oil heat to a heat pump would mean people are no longer at the mercy of the financial markets when it comes to the price of oil. Electricity, he noted, is a regulated market largely free of the external influences that can affect the price of oil.