Newfoundland, Nova Scotia, PEI to start paying federal carbon tax

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Residents of three Atlantic provinces will start paying the federal carbon tax this summer after a federal review determined their provincial systems no longer meet federal standards.

The federal fuel charge will continue to apply in Alberta, Saskatchewan, Manitoba, Nunavut, Ontario and Yukon, Environment and Climate Change Minister Steven Guilbeault announced Tuesday. The charge will expand to Newfoundland and Labrador, Nova Scotia, and Prince Edward Island beginning July 1, 2023.

By then the carbon tax will have hit $65 per tonne of carbon dioxide equivalent, from $50 per tonne in 2022. The price is set to rise by $15 per tonne annually to reach $170 per tonne in 2030.

The increase means consumers will pay 14.3 cents per litre of gasoline in fuel charges in 2023, about 3.3 cents higher than this year. The carbon tax hike means heating oil – upon which large swaths of Atlantic Canadians rely to warm their homes – will cost an extra 4 cents per litre in 2023 compared with this year.

The initial carbon price and its trajectory up to 2022 was set in 2016. But the federal government reviewed carbon pricing systems in Canada in 2020-21, which included an independent expert assessment led by the Canadian Institute for Climate Choices. The institute found significant variations in the stringency and effectiveness of different systems across Canada, and concluded that changes to the systems were necessary to ensure that all carbon pricing systems in Canada are similarly effective in cutting pollution and supporting domestic competitiveness.

As a result the federal Liberal government has updated the minimum national standards for the 2023-to-2030 period, arguing the change makes sure that carbon pricing systems across the country are fair, consistent and effective.

But Atlantic provinces roundly criticized the move.

Nova Scotia Premier Tim Houston said it was profoundly disappointing that Ottawa would impose a carbon tax on Nova Scotians at a time when fuel and heating costs are at an all-time high.

“Let me be clear – Nova Scotia supports action on climate change but doesn’t support a carbon tax of any amount on home heating oil at this time. It’s incomprehensible to me that the federal government doesn’t agree,” he said.

Mr. Houston said Ottawa could have chosen to accept his government’s legislated plan to reduce greenhouse gas emissions which would have achieved and exceeded federal goals, but instead “is imposing a carbon tax knowing Nova Scotians, and Canadians, are struggling.”

While Mr. Houston welcomed the fuel rebates that Nova Scotians will receive, he said even record-high gas prices have failed to stop rural residents driving – and a carbon tax is unlikely to change that.

“That’s because people in our rural communities need to drive. They don’t have options to ride a bike to work, take the bus or – as a federal minister suggested – use the subway. The federal government’s failure to understand this shows they’re simply out of touch,” he said.

“They could have paused the program and worked with premiers across the country to find ways to support people and reduce emissions that did not include a punitive carbon tax.”

The Newfoundland and Labrador government, meanwhile, said that imposing the federal tax doesn’t reflect the pressures that residents and businesses are facing with the rising cost of living, nor the province’s “meaningful actions to address climate change and being a leader in transitioning to cleaner energy.”

“This is disappointing news that will impact many,” Bernard Davis, the Minister of Environment and Climate Change, said in statement.

Seamus O’Regan, Minister of Labour and MP for St. John’s South-Mount Pearl, acknowledged concerns that the system was being rolled out at a time when families are facing higher costs for everything from groceries to gasoline.

“This is about making life more affordable, while lowering emissions – that’s it, that’s the job and that’s what we are doing,” Mr. O’Regan told media Tuesday.

In responding to reporters’ questions, both Mr. Guilbeault and Mr. O’Regan pushed back against affordability concerns, insisting the new system would not hurt Newfoundland and Labrador residents who use heating oil in their homes.

“I am sick and tired of people talking about the cold winter and what we’re doing – this does not happen until July, and this will by far benefit more people in Newfoundland and Labrador, because it encompasses way more than home heating oil,” Mr. O’Regan said, adding that the system would result in payments to residents.

“It’s important to know that this winter, there will be no impact on home heating costs in these Atlantic provinces, because the system only comes into effect on July 1st of 2023,” Mr. Guilbeault said, adding that households would receive their first payment before the system kicks into place.

In 2023, quarterly payments for a family of four will increase to $386 in Alberta, $264 in Manitoba, $244 in Ontario and $340 in Saskatchewan. For the provinces just entering the program, quarterly rebates for a family of four are set to start at $328 in Newfoundland and Labrador, $248 in Nova Scotia and $240 in Prince Edward Island.

Residents in small and rural communities who receive the federal rebates will also receive a 10-per-cent supplement to reflect limited access to clean transportation options. (The amount for Prince Edward Island includes the 10-per-cent rural supplement, as all residents are eligible.)