On November 22, 2022, the federal government announced new carbon pricing agreements for all provinces and territories for 2023-2030. This announcement brings significant changes in Atlantic Canada in particular, as the federal backstop plan (carbon tax) will now apply to Nova Scotia, Prince Edward Island, and Newfoundland and Labrador effective July 1, 2023. New Brunswick will continue with its own carbon pricing plan during this period.
The provincial governments in Nova Scotia and Newfoundland and Labrador released responses critical of this announcement.
Beginning in 2023, the federally required price on carbon will increase from $50/t CO2e to $65/t and will increase by $15/t each year until reaching $170/t in 2030. For context, this means the carbon price per litre of gasoline would increase from about 11 cents in 2022 to 38 cents in 2030. The carbon price for diesel and would increase from about 13 cents in 2022 to 46 cents in 2030. The price per litre of home heating oil in 2030 would be 46 cents as well.
In New Brunswick, the new provincial carbon price will take effect on April 1, 2023. Residents will continue to see revenues cycled with a combination of tax reductions and green programming, such as the Climate Change Action Fund.
Under the federal backstop plans, 90% of revenues collected will be returned to residents through the Climate Action Incentive payments. The remaining 10% will be returned to small businesses and Indigenous groups.
As a result, residents in Nova Scotia, Prince Edward Island, and Newfoundland and Labrador will begin receiving Climate Action Incentive payments next year to recycle revenues collected from the carbon pricing. A family of four in Newfoundland and Labrador will receive $328 every three months, while the same family in Nova Scotia would receive $248. Rural residents in the two provinces will receive an additional 10%. In Prince Edward Island, a family of four would receive $240 every three months. To be eligible for the Climate Action Incentive Payment, residents must complete an annual tax return.
It is important to recognize that any home heating oil exemptions from federal carbon tax will no longer be allowed beginning July 1, 2023.
It is also important to note that Fishers and farmers are currently exempt from paying the federal fuel charge on gasoline and light fuel oil (e.g., diesel) used for eligible fishing and farming activities.
For Output-Based Pricing Systems, which will apply to the largest fossil fuel users, New Brunswick, Newfoundland and Labrador, and (recently) Nova Scotia have provincial systems in place. Prince Edward Island will continue to operate under the federal OBPS until 2030.
To learn more about carbon pricing systems across Canada, read: https://www.canada.ca/en/environment-climate-change/services/climate-change/pricing-pollution-how-it-will-work/federal-carbon-pollution-pricing-benchmark.html.
To learn more about Output-Based Pricing Systems across Canada, read: https://www.canada.ca/en/environment-climate-change/services/climate-change/pricing-pollution-how-it-will-work/output-based-pricing-system.html.