Here’s Why N.B.’s Carbon Tax Won’t Reduce Greenhouse Gas Emissions
FREDERICTON – New Brunswick’s own carbon tax plan has taken effect, concluding two years of pushback against the federally-imposed measure.
But you might not notice the change on your heating bill or next fill up at the pump, and not just because gas prices have been dropping dramatically in the last several weeks.
There’s little expected impact on consumers as gas prices drop just a few cents under the new provincial plan. Experts warn the lightened tax will likely do minimal to curb emissions and has only removed attention from more effective policies in the fight against climate change.
Louise Comeau, a climate-policy researcher at the University of New Brunswick, said a concern is how the province’s plan uses the revenue to directly offset annual increases.
“They may just keep doing this so that consumers here never see the price signal, which means it’s a total waste of time from a behaviour point of view,” she said.
The previous plan, imposed last year by the federal government, included annual increases in gas excise tax by a little more than six cents, offset by household rebates. That element was a key component designed to incentivize consumers to use less fuel.
The new provincial system under the Progressive Conservative government reduces that increase to about two cents – without future jumps. Under the imposed plan, consumers were charged an additional 4.4 cents per litre in 2019-20, set to rise to 6.6 cents for 2020-21.
The federal rebates – which end under the provincial framework – were designed to help Canadians adjust to price increases by becoming more energy efficient.
The made-in-New Brunswick plan takes most of the revenue generated by carbon pricing – $83-million – to subsidize losses on the excise gas tax. After that, $9-million will go to offset any impact on the natural gas industry and the remaining $36-million will go towards a climate action fund.
Those details were unveiled when the Progressive Conservative government tabled its budget for the next fiscal year last month.
Finance Minister Ernie Steeves told reporters in March that the new plan was designed to protect consumers as a nearly seven cent per litre increase on April 1 would be “an awful hard pill” for most New Brunswickers to take.
“That’s a whole lot more than we were able to do last year,” Steeves said of the action fund. “And there are projects that I’m sure the Green Party and others throughout the province, throughout government will come up with and I’m excited about that.”
The province has yet to provide specifics on how the climate action fund might be used and its pricing system for large industries is also still up for federal approval.
Green Party Leader David Coon said the greatest value of a carbon tax is the revenue it generates to support households and small businesses in energy efficiency improvements that reduce fossil fuel consumption at the source. That’s compared to directly influencing consumer behaviour – which requires high prices.
“The level of carbon tax that governments would put into place on gasoline for example just vanishes into the wild fluctuation in gas prices that occur,” he said.
Gas prices have been plummeting across Canada since early March, going down to well below $1 per litre. That drop means the small effect of the carbon tax is nearly hidden.
The intent under New Brunswick’s plan is to offset increases so consumers see no year-to-year jump in prices. Coon said that’s a “huge mistake” which eliminates longtime influence on things like vehicle purchase decisions.
Comeau said a better approach to incentivize consumers would be to leave the excise tax alone and direct all revenue to incentives and rebates that help New Brunswickers buy low-emission vehicles and energy-efficient appliances.
She said Ottawa approved New Brunswick’s plan along with similar approaches in Prince Edward Island and Nova Scotia in an effort to get all provinces to adopt the tax.
“You can’t do worse than what they’ve done,” Comeau said. “You start with a low price, and then you make it even lower, and then you deprive yourself of revenue to try to offset existing energies so that people’s bills don’t go up as prices go up.”
While New Brunswick’s plan taxes natural gas like the federal one, all $9-million in revenue will go straight back to Liberty Utilities to prevent an increase in home heating bills.
Coon said the long debate on the issue has shifted the focus away from regulations on fossil fuels which are most effective at reducing emissions.
“The carbon tax, unfortunately, has occupied way too much political and media space because its impacts are relatively small,” he said.