Canadian Manufacturing

N.S. cap and trade system for reducing carbon emissions accepted by Ottawa

Nova Scotia is setting a goal of reducing emissions by 45 to 50 per cent of 2005 rates by 2030

October 25, 2018  The Canadian Press

HALIFAX – Nova Scotia’s cap-and-trade system has received Ottawa’s blessing, with the premier saying his citizens will be better off than they would be under a federal carbon tax.

The province has long held that its electricity sector had made big strides in reducing carbon emissions as Nova Scotia shifted away from coal-based generation in recent decades to less-carbon intensive methods – raising electricity prices in the process.

However, government officials said the province was still required to put a price on carbon under Ottawa’s new rules, and as a result Nova Scotia is setting a goal of reducing emissions by 45 to 50 per cent of 2005 rates by 2030.

In an announcement Tuesday, the provincial government said its system of capping the amount of carbon for large emitters, and requiring them to either purchase credits or reduce their carbon output to meet the caps, will reduce carbon by 650,000 tonnes between 2019 and 2022.


Meanwhile, the province says costs passed on to consumers are estimated to be about one cent per litre of gasoline over the four years, along with a one per cent increase in electricity prices in the same time period.

Premier Stephen McNeil said the price of gasoline would have gone up 11 cents per litre and electricity rates would have risen eight per cent if Ottawa had created a carbon tax system in the province.

“We believe we’re driving results for Nova Scotians,” the premier said as he announced federal approval of his province’s program.

“Nova Scotians have already done a tremendous amount of work in reducing our greenhouse emissions through the power rates. We have said we want that to be recognized so that Nova Scotians each and every time they’re going to the (gasoline) pumps aren’t being negatively impacted.”

However, opposition parties said those estimates are misleading as they don’t take into account the rebate cheques Ottawa is promising to send individual citizens in provinces with a carbon tax.

“It’s not at all the case, as the premier has suggested, that Nova Scotians will be in some financially better place in their pocket books,” said NDP Leader Garry Burrill.

“It appears with the rebates under the federal program in the long run the majority of the people of Nova Scotia would be money in.”

Meghan McMorris, a spokesperson for the Ecology Action Centre, said the cap-and-trade system is a “good start,” but in the end it isn’t providing the same transparency as a carbon tax.

“The advantage of a carbon tax is that it’s very easy to figure out what the cost will be to all citizens, and how it will trickle through the economy and supply chains,” she said in an interview.

She said it’s important citizens understand the cost of carbon, noting the recent Intergovernmental Panel on Climate Change report, where scientists argued the world needs to aim to hold average global warming to no more than 1.5 degrees C.

The Nova Scotia system is projected to produce $25 million to $30 million annually for a fund to promote green technologies and innovation – a feature that McMorris praised.

The province said that money will begin to flow in 2020, and will be used to fund programs that reduce greenhouse gas emissions, to assist clean energy startups and to pay for adaptation to climate change.

Jason Hollett, the executive director of climate change in the province’s Environment Department, said during a briefing that under the Nova Scotia system there will initially be about 21 companies in the program.

Those include facilities that generate 50,000 tonnes a year or more of greenhouse gas emissions, petroleum product suppliers, natural gas distributors and electricity importers that generate 10,000 tonnes of greenhouse gas annually.

Some large factories listed by the province, including Northern Pulp and Lafarge, would receive added allowances under the system because the province doesn’t want them to close and move to areas where the prices charged for carbon emissions are lower, said Hollett.

The system varies from sector to sector, as each firm receives an “allowance” of carbon under the system.

For instance, in the case of electricity, the province will give Nova Scotia Power 90 per cent of this allowance “for free,” and the company will have to either reduce emissions for the remaining 10 per cent, or purchase credits at auctions from either the province or from other participants in the system.

There is also going to be a “government reserve” of credits, for participants unable to find the emission credits they need to operate – but that will be a higher price per tonne, he said.

The minimum price per tonne of carbon will be $20 in 2020 with inflation increases each year afterwards, said Hollett.

Hollett said the reserve could be used to provide an allowance for new entrants into the system.