Federal consumer carbon price to expand to three Atlantic provinces next summer

Carbon tax looms over N.S. and P.E.I. Those in N.S. and P.E.I. will start paying the carbon tax on Canada Day. Federal ministers have now revealed what the new tax will cost.

OTTAWA — Federal ministers were spoiling for a fight over carbon pricing Tuesday as the Liberals moved to expand the federal system -- and the accompanying rebates -- to three Atlantic provinces.

Environment Minister Steven Guilbeault said updated pricing plans submitted by Nova Scotia, Newfoundland and Labrador and Prince Edward Island don't meet the higher standards for carbon pricing that will take effect next year.

So on July 1, consumers and smaller businesses in those provinces will join those in Alberta, Saskatchewan, Manitoba and Ontario who already pay the federal carbon price and receive the associated rebates.

And some leaders are not happy about it, with Nova Scotia Premier Tim Houston accusing the federal government of being "out of touch."

Ottawa would not specify what specifically disqualified the plans submitted by those provinces, though there are known disagreements about whether home heating oil should continue to be exempted from the policy, and whether provinces can cut gas taxes or natural gas prices to offset the cost of the carbon price.

The three Atlantic provinces already charged the same carbon price on most fuels, including gasoline, diesel and natural gas, but heating oil was exempt.

That will no longer be the case, with the carbon price expected to add an initial 17.4 cents per litre to the cost of heating oil.

Though heating oil isn't common outside the Atlantic region, as many as half the homes in P.E.I. rely on it. In Nova Scotia, it's about one-third, and in Newfoundland, it's about one-fifth.

Guilbeault stressed that the new cost won't take effect until July, after the upcoming winter is over. And the carbon price rebates will start to flow the same month. Every three months, he said, households in Newfoundland will receive $328, while the amount will be $248 in Nova Scotia and $240 in P.E.I.

"It's important to know that the rebate payments arrive before the fuel charge is felt," he said.

He also pointed to recent programs offering federal help for Atlantic residents to replace heating oil, including an offer of up to $5,000 to buy heat pumps, which use electricity.

Guilbeault acknowledged that the government has not done a great job making the carbon rebates visible to people. He said he is hoping the switch this year to quarterly payments helps improve that.

Residents in seven provinces will now get rebates from the federal government under the policy.

British Columbia has its own approved carbon price and pays its own rebates. Quebec has a cap-and-trade system without direct rebates. New Brunswick is set to unveil the details of its pricing plan soon, and it already got Ottawa's approval.

Ottawa also greenlighted Saskatchewan's plan to incorporate natural gas pipelines and power plants into its provincial pricing system for big industrial emitters. Ottawa prices pollution from big emitters separately, charging them on a portion of the emissions they produce rather than on the fuels they purchase.

Previously, Saskatchewan exempted pipelines and power plants from its provincial price, but it no longer will.

Eight provinces will now use their own provincial pricing system for big industry, which Guilbeault agreed is a sign that the debate about whether those emissions should come with a cost is over.

The debate continues, however, on whether a consumer carbon price is the right move. Atlantic premiers slammed the federal government Tuesday for extending it to their provinces.

Newfoundland Premier Andrew Furey was mainly upset about the tax being expanded to home heating oil at a time when its price has already soared.

"It is with this in mind that I have advocated again and again for flexibility regarding the carbon tax," he said.

Houston, Nova Scotia's premier, said he was "disappointed" in the decision, which is adding costs for people at a time when they're already hurting.

"The federal government's failure to understand this shows they're simply out of touch," he said.

Houston said he sent a six-page letter to Guilbeault ahead of the announcement that detailed his objections to a carbon tax, including that most Nova Scotians don't have lower-emission alternatives to driving.

Labour Minister Seamus O'Regan, who appeared with Guilbeault at a press conference on Tuesday, was having none of it.

"What I particularly resent is the stoking of drama and anxiety among people, whether it be in my province or any anywhere in the country," he said.

O'Regan, who represents a St. John's riding, insisted that carbon pricing isn't making life less affordable because the rebates are worth more to most people than the carbon prices they will pay -- something that has been confirmed by the Parliamentary Budget Officer.

"This is a good plan, and there will be more money in your bank account than there was before, and you will be doing something very effective."

Guilbeault said the idea of a carbon price is that it provides a financial incentive to find ways to curb the use of fossil fuels by making it more expensive to buy them. The rebates prevent families from losing money overall while still having an incentive to cut fuel use, he said, because the rebates don't change even if you do cut back on your fuel use.

Guilbeault appeared particularly irked by his interactions with Houston.

"I find it unconscionable, really, that Premier Houston would have this type of attitude, after what we've seen in Atlantic Canada, with the passage of the most severe hurricane in the history of Canada," he said.

Houston calls himself a "progressive conservative," Guilbeault added. "I guess we don't have the same definition of what progressive means."

For his part, Houston cryptically implied that the Liberals will pay for this move in the next election.

"Nova Scotians will remember," he said.

This report by The Canadian Press was first published Nov. 22, 2022.

-- With files from Keith Doucette in Halifax and Sarah Smellie in St. John's.