New Brunswick is hoping that a phantom tax on carbon will keep the federal government at bay, but the early response from federal Environment and Climate Change Minister Catherine McKenna is that she’s not falling for it.
New Brunswick’s Bill 39, the Climate Change Act, is ostensibly the province’s response to the Pan-Canadian Framework on Clean Growth and Climate Change, which the province signed, and the federal government’s call under that framework for a price on carbon beginning at $10 per tonne in 2018, rising to $50 per tonne in 2022.
Rather than impose an additional cost on carbon, New Brunswick’s Bill 39, introduced on December 14, 2017, will divert a steadily rising portion of the province’s fuel taxes (on gasoline and diesel) to a new Climate Change Fund that will support a range of greenhouse gas reduction and climate change adaptation efforts. The diverted portion of the tax would be 15% in fiscal year 2018-19, rising to 75% in fiscal year 2022-23 and subsequently.
Though it is not part of Bill 39, as part of the announcement New Brunswick Environment and Local Government Minister Serge Rousselle said the province’s large industrial emitters (roughly 10 facilities emitting more than 50,000 tonnes of greenhouse gases annually) would also be subject to federal output-based performance standards released as a draft in May 2017.
New Brunswick is arguing that it has earned a break because of its early success. A December 2017 analysis by the Pembina Institute ranks New Brunswick top-of-class among provinces for greenhouse gas reduction, cutting emissions by more than 30% over the period 2005-2015.
“New Brunswick is already a climate change leader,” said Rousselle. “We have met our own 2020 provincial targets and we have also equalled Canada’s 2030 emissions target. Our plan is an opportunity to contribute to the reduction of our greenhouse gas emissions, while seizing the opportunities of a low-carbon economy.”
In a response through social media, however, McKenna has suggested the New Brunswick approach falls short. Shifting current tax revenue into a climate fund “does not create a new incentive to cut carbon pollution,” McKenna wrote in a December 14, 2017 Facebook post. “We will be assessing each jurisdiction’s approach to carbon pricing against our standard next year. If a jurisdiction’s approach doesn’t meet our benchmark, we will apply our federal option there,” she added.
The federal government has already moved the goalposts on carbon pricing. In a late December 2017 letter to provinces, McKenna and federal Finance Minister Bill Morneau gave the provinces until September 1, 2018 to reveal their carbon pricing plans to meet federal standards, with nationwide carbon pricing now kicking in on January 1, 2019.