Nova Scotia legislation to replace cap-and-trade system for greenhouse gas emitters

HALIFAX -

Nova Scotia tabled legislation on Tuesday for an emissions-reduction plan that would replace its cap-and-trade system for large industrial greenhouse gas emitters, but the new bill doesn't lay out how the province will meet its ambitious climate goals.

The proposed changes to the Environment Act would create a pricing system based on greenhouse gas output, Environment Minister Tim Halman told reporters, adding that the new plan would also include targets and performance standards to be set out in regulations.

"The changes will allow us to set up a new system," Halman said. "If participating emitters do not meet the performance standards, they will have to pay a carbon price."

Halman said Environment and Climate Change Canada has given the "green light" to the province's plan to replace the cap-and trade-system, which expires at the end of the year. The new system -- which still needs approval from the federal cabinet -- is scheduled to begin Jan. 1, he said.

The federal department declined to comment on Nova Scotia's proposed legislative changes when contacted Tuesday.

Nova Scotia submitted its plan to the federal Environment Department in early September, but the plan did not include a carbon charge, which Ottawa can still impose on the province. The federal government has said it will impose a federal carbon charge on provinces that do not submit a carbon-pricing plan it deems acceptable and that adheres to Canada's greenhouse gas emission targets.

Nova Scotia's carbon-pricing system would not apply to gasoline and furnace oil but would affect rates for electricity. Halman said a federal carbon price would increase power rates by eight per cent while the province's plan would limit rate increases to two per cent.

Participation in the province's new system would be mandatory for Nova Scotia Power and the Lafarge cement plant near Truro, N.S. -- as they both emit at least 50,000 tonnes of greenhouse gases annually -- and would be optional for other companies below that threshold.

The legislation would also create a Nova Scotia Climate Change Fund, which Halman said could raise $380 million by 2030 for energy-efficiency programs and potential rebates.

Brenna Walsh, an energy co-ordinator with the Halifax-based Ecology Action Centre, said that while legislation governing large emitters is needed, the province still hasn't released a detailed strategy to meet its climate goals -- a 53 per cent reduction of greenhouse gases, below 2005 levels, by 2030.

"These emissions from these two large emitters (Nova Scotia Power and the Lafarge cement plant) really only cover a small piece of the pie in terms of where these reductions need to come from," Walsh said in an interview Tuesday.

Meanwhile, Halman made it known in September that his province wants to control revenues from a potential federal price on carbon -- an estimated $1 billion or more by 2030. The federal government has promised to buffer the impact of a carbon charge by returning the money collected by the state to Canadians.

On Tuesday, the Nova Scotia minister hinted that the two sides have not been seeing eye-to-eye during talks on how that money will be spent. "Was I surprised at how rigid they (Ottawa) were? Probably," Halman said, adding that discussions are ongoing.

The price of carbon under the federal charge will increase by $15 per tonne in 2023, and then rise again every year until it reaches $170 per tonne in 2030. Nova Scotia officials have said the charge could add 14.4 cents per litre to the cost of gasoline in the province by April 2023.

This report by The Canadian Press was first published Oct. 18, 2022.