Preparing for a Carbon Tax

A carbon tax is coming to New Brunswick. What will it mean for the province’s businesses?

That’s something many are pondering following an announcement by Prime Minister Justin Trudeau last month saying he’s giving the provinces until 2018 to adopt a carbon pricing system, or the federal government will impose a price on them. This may have come as a push for the provinces, including New Brunswick, who don’t have such schemes in place.

Though it has yet to be determined what such a system will look like in New Brunswick, the province’s Select Committee on Climate Change has suggested  a transparent holding account for carbon revenue, a carbon tax fund, which the government would use to invest back into carbon-reducing initiatives. The province has the goal of a 10 per cent reduction of the 1990 greenhouse gas levels by 2020, reaching at least a 35 per cent reduction by 2030.

This can all seem a little daunting for some businesses.

“There are two paths companies can look at,” says Chris Peterson, principal consultant at Anthesis, a global sustainability consulting firm that helps businesses create value through sustainability. Peterson is also on the board of Sustainable Saint John.

“They can accept this as a cost and treat it as a tax, but then it’s going to hurt them on all kinds of fronts. If they treat it as an opportunity and embrace this new reality that we’re facing, then they can pursue innovation, new opportunities within that and drive efficiencies within their operations … and improve their competitiveness on a global basis.”

The federal government says minimum carbon price should be $10 a ton in 2018, rising by $10 each year to $50 a ton by 2022. Peterson says now is the time for companies to start putting new systems in place to deal with that reality.

“Organizations can start today to understand what is the scale of their footprint, put in the systems they need to be able to quantify that and track that over time, as well as start to put in place the infrastructure to get ready for a $50 per ton reality.”

Peterson says businesses can start this process now by truly understanding their emissions or “carbon footprint.”

“First step is understanding the scale of your emissions and what your footprint is,” he says. “If you don’t have a sense of that, [start by] going through an exercise to define how big of a ‘problem’ [carbon emission] is for you. That will help as things start getting defined.”

From there, a business can figure out where improvements and efficiencies can be made, whether by reducing waste or switching fuel and energy sources. Peterson says a company can then start looking at where fundamental changes can be made in the business model itself.

“That’s starting to look at your value chain. What are the major impacts you’re putting on your customers and some of the risks there? And what are some of the risks for you that are embedded in your supply chain?” he says.

“If you’ve got a supplier that’s either producing in Nova Scotia or Saskatchewan then that’s going to see a big impact because of their energy grid. You may see that cascade into your prices. Or if you’re a heavy fuel user doing a lot of transportation, are there things you could be doing to improve within that?”

Peterson says this final step is to bring all these parts together into a single company strategy or program.

“Not just individual activities … but really optimizing across the system really enables you to communicate disparate activities in a coherent story that then taps into revenue generation and engagement with customers and within your own organization.”

Of course, many businesses can’t do this all in 18 months, but Peterson says the key is to start now. Climate change isn’t going anywhere after all.

“Hopefully this is a warning sign, a helpful first step for them to think about what this is going to look like five, ten years down the road,” he says. “What are some of the things we need to put in place today to get ready for that? Whether that’s from a business model perspective, reduce consumption of fossil fuels or tighter regulations or whatever it may be.”

Many businesses in the province have been working to reduce emissions for a while now. For building management company Commercial Properties, being green is just a part of doing business. Whether it’s switching to LED lighting or moving to more efficient heating and cooling systems, it’s something they’re constantly monitoring.

“Energy consumption is directly related to costs for us and costs for out tenants,” says Megan Scott, operations analyst for Commercial Properties.

Yet with a carbon tax looming, she says the company plans to take things a step further. Scott says she will be taking the Greenhouse Gas Protocol emissions seminar, which is one of the leading accounting standards for tracking corporate emissions. This will help equip her to monitor company emissions at every level.

“That takes into account our company as a whole in terms of our office practices and company practices as opposed to just things related to our building operations,” Scott says.

Susan Atkinson, director of Climate Change Mitigation with New Brunswick’s department of environment says the imminent carbon tax is an opportunity for businesses to innovate.

“This is all about making your business smarter and more competitive in the end,” Atkinson says. “A price on carbon is intended to motivate business and individuals to be smarter in the way that they use energy.

She says though some businesses may fear such changes, little things can go a long way.

“I think if you just look at it from a business model, it’s not really change. It’s just looking at your waste and getting rid of waste. It’s wasteful energy,” says Atkinson. “You’ll find most business can reduce their waste by at least 10 to 15 per cent easily, then you can push it much further with more elaborate programs and initiatives.”

Yet for business, especially small ones who need or want to make bigger changes, Atkinson sees how there may be some challenges.

“I think for a lot of small businesses, they don’t have a lot of extra capital or extra dollars. I think the first challenge for them is to try to find those funds to get them moving,” she says.

Atkinson says there are already some programs in place, such as the NB Power’s Smart Habits, but says more are likely to pop up.

“I think it would be fair to say down the road just as we’ve seen in other provinces that have already undertaken carbon pricing, they have expanded their programs to assist both individuals and companies in making the right choices,” she says.

Implementing a carbon tax is bound to bring some challenges and annoyances for people and businesses, but Peterson says it’s an opportunity to adapt early for how climate change will inevitably change our world.

“In lots of ways, it’s like the introduction to the Internet. It’s a total game-changer in terms of the way businesses operate and the context we within society will need to be functioning,” he says. “So organizations need to be embracing that and how can they create value within a new system. That creates a lot of opportunities and challenges.”