OPEN LETTER: Request For Nova Scotia’s Carbon Price To Go Upward And Onward

OPEN LETTER: Request For Nova Scotia’s Carbon Price To Go Upward And Onward

–March 31, 2017–

Since 2011, Citizens’ Climate Lobby Halifax/Nova Scotia members have been lobbying their provincial and federal levels of government for carbon fee and dividend: a national, upstream, and incrementally rising carbon tax where 100 percent of the money is returned to citizens on an equitable basis. Pricing carbon emissions is one of the most powerful incentives that governments have to encourage companies and households to pollute less by investing in cleaner technologies and adopting greener practices. In December 2016, the provinces and territories agreed to an overarching national carbon pricing policy. The provinces and territories can choose which carbon pricing system to use. Nova Scotia has chosen a cap and trade system. The Nova Scotia government has taken a first tiny step toward putting a price on carbon to ensure a healthy climate for us and future generations. The national minimum carbon price starts at $10 per tonne in 2018 and rises to $50 per tonne in 2022. However, $50 per tonne won’t be enough to meet Canada’s goal of reducing emissions to 30% below 2005 levels by 2030 and our current goal is woefully inadequate. Nova Scotia has already met this goal partly because we started as high emitters in 2005. If every country adopted Canada’s targets, this would not keep warming below 2oC. In short, we are off to a great start, but we must do better.

Our key concerns:

● The proposed system would allocate carbon allowances to most emitters at no cost. They could trade among themselves but no or very little revenue will be generated for the government to use to offset higher costs for consumers or smaller businesses or to incentivize other possible reduction activities like conservation. This is a very weak system.

● NS received an exemption from the federal goal of closing coal-fired plants by 2030. The Cap & Trade program proposes to include NS Power plants. Nova Scotia Power, whose emissions constituted 44% of all NS emissions in 2014, is by far the largest source of GHG emissions in NS, mostly due to coal-fired plants. How the exemption and the Cap and Trade system will affect each other must be made clear. It is essential that the Cap and Trade program is not kept weak to enable coal plants to stay open longer.” NOTE: Source re. electricity as 44% of NS GHGs = Canada’s 2016 National Inventory Report, 1990-2014: Greenhouse Gas Sources and Sinks in Canada, 1990–2014 Canada’s Submission to the United Nations Framework Convention on Climate Change, Part 3, pp 41 & 91. Based on 2014 data, NS’ electricity sector produced 43.6% of NS’ GHGs. National inventory submissions 2016 link

● Keeping the regressive affordable energy rebate also eliminates the incentive to conserve. Preferable would be a carbon fee and dividend with monies returned to low and middle income households as a reward for using less energy than high income households. In this scheme the lowest income households would come out ahead and the middle class would break even.

● For the carbon price to reduce emissions significantly, it must continue to rise past 2022 and reach at least $150 per tonne by 2030. A carbon price of $150 per tonne would increase the cost of living throughout most of the 2030’s by approximately $2,000 per person per year.

● For long-term viability, the carbon pricing policy must be as bullet-proof as possible against populist and cynical attacks. There has to be a broad-spectrum of political will for the carbon pricing policy. See below for how this can be done.
● The system announced does not cover all emitting sectors – but it should if policy-makers want to avoid costly ‘leakage’. Free allocations and thresholds must be gradually phased out.

● There is unclear equivalency between carbon tax and cap and trade prices.
● The proposed NS system would be for NS on its own. It would not be linked to any other Cap and Trade system. This will make it difficult if not impossible to establish a “market” for carbon because we are too small.

● Complexity, lack of transparency, transaction and administrative costs, additionality of offsets, and price volatility: the latter especially discourages investment and innovation.

● Emission intensive and trade exposed sectors of the Canadian economy deserve Border Tax Adjustments in preference to free allocations.

● Transparency and reporting the cost of compliance with the Cap & Trade system needs to be published regularly for citizens.

The simple steps needed:

● That the carbon price be economy-wide and continue to rise past 2022 to $150 by 2030 with the objective of Canada exceeding our Paris targets and becoming a world leader in tackling the climate crisis and in the clean tech industry.

● To abate populist and cynical attacks, the rising carbon price should not impose any additional burdens on low and middle-income Canadians. We recommend revenue neutrality and that the current cap and trade policy morph into either a cap and dividend program and/or carbon fee and dividend.

● We need unprecedented cooperation between the federal government, provinces, and territories. They must continue to meet openly and regularly and at the soonest possible date determine the price equivalencies between carbon taxes and cap and trade as well as start planning in earnest carbon pricing beyond 2022.

● When the province of Nova Scotia meets with their federal, provincial and territorial counterparts, Nova Scotia should support the ending of financial subsidies to fossil fuel companies.

● Now that we have a national carbon pricing policy, to level the playing field for businesses that are emissions intensive and trade exposed, the Province of Nova Scotia needs to support Border Tax Adjustments with international jurisdictions without a similar carbon price.

● The cap and trade program does not directly cut GHG emissions in Nova Scotia in a scientifically sound manner and/or there is a lack of political will for the program – enact carbon fee and dividend.

Climate and energy are highly connected and complex files. We are here to help.

Additional constructive suggestions and criticisms from Nova Scotians:

1. Realize the opportunity to introduce a fair and effective structure for increasing the cost of carbon. We worry that the NS government has taken the weakest version of Cap and Trade and made it into the least effective type of that structure that they could manage. They have the expertise of a world scholar on this topic at their doorstep, Dr. Kate Ervine and we hope that they will seek her input in crafting their solution.
2. Make it easier for Nova Scotians to pursue opportunities for further uptake of renewables such as feed-in-tariff programs for wind, geothermal and solar hot water, solar thermal and solar PV.
3. Establish a firm date for NS Coal plants to close, no later than 2035. The current exemption is open-ended and would make it difficult to meet NS’ GHG targets. If a carbon price equivalent to $150/tonne CO2e is established by 2030 as recommended by this statement, coal plants will likely close earlier.
4. Reverse the opening of the new Donkin Coal mine. The NS government once again encouraged the lowest of all levels of political/public discourse to justify it by polarizing the discussion on jobs vs. no jobs instead of identifying and really creating opportunities for a new green economy with jobs in efficiency and renewables and public transportation.
5. Discontinue permission for the development of the Alton gas storage caverns, an infrastructure which will either hook NS into LNG or US fracked gas. No environmental regulations, no baseline measures, no consultation with the First Nations, no clue.
6. Tell the truth about the inaccuracy promoted about the cost of renewables as having been responsible for the increase in the electricity rates in Nova Scotia and that higher rate cost as their justification for not doing any more renewables presently. Admit we have not done enough already for now.
7. Respond to the crisis that the biomass plant is causing and the crisis that clear-cutting is causing both of which affect GHG emissions and potential sinks.
8. Pursue importing electricity from Hydro-Quebec that would shut down 2 coal-fired generating plants shortly- and make possible record long contracts for record low prices
9. Integrate the reality that one-quarter of our GHGs come from transportation and that adding more very expensive infrastructure for more capacity involving carbon emission increases has not given due diligence to any analyses of other options such as commuter rail or better public transportation. (e.g. commissioning a consultant’s report ($800,000) to look at highway twinning without having it include these less carbon intensive cleaner options.)
10. Recognize and act responsibly regarding the irony that the Emera Corporation (parent company of NS Power) has an RFP out for about 900MW of electricity (wind) and is working to develop an undersea cable to New England so they can export green electricity (probably from NB) to the US, while NSPI continues to burn coal in NS.
11. Pressure the Trudeau government to stop the renewal of the (Shell?) oil & gas exploration license in the Gulf that was approved a couple of months ago. That would put an end to that threat to one of the richest remaining ecosystems in oceans anywhere.

Regards,

Sincerely,
Joanne Light
Group Leader CCL Halifax,
902-429-1571