Federal government sends mixed messages on how provinces can price carbon

Nova Scotia Premier Stephen McNeil is pointing to differing messages coming from the federal Liberal government over what constitutes a price on carbon.

The Trudeau government has promised to negotiate a pan-Canadian climate plan this fall with the provinces and territories in order to put Canada on track to meet its international Paris accord commitments.

In advance of a full meeting of all the environment ministers a week from Monday in Montreal, federal Environment Minister Catherine McKenna has said a national carbon price is coming as part of the plan — and that only a carbon tax or cap-and-trade system are considered acceptable pricing options.

"There are two ways you can price carbon," said McKenna said last week in New York, where she was attending United Nations meetings. "There's a cap-and-trade and there is a carbon tax."

But Prime Minister Justin Trudeau appeared to leave the door open to a broader interpretation of carbon pricing in an interview two days earlier with Buzzfeed.

Trudeau pointed to the Vancouver Declaration signed last March by all the premiers, which agreed to explore carbon pricing as a means to reducing greenhouse gas emissions.

"Now what form that takes, whether it's a carbon tax, whether it's a cap-and-trade, whether it's through regulations, there's all sorts of interesting and important discussion to be had, we have very different jurisdictions across the country," said Trudeau.

"All premiers have agreed we need to have a price on carbon and we're going to move forward and we're going to reduce emissions. That's something that yes, we're going to make sure that everyone does. But we're going to do it in a kind of collaborative way."

A spokesman in the Prime Minister's Office clarified Sunday that "the prime minister was not suggesting that regulations are a third category for provinces to achieve that national price on carbon."

The prime minister was talking about regulations in the broader field of climate actions, said Cameron Ahmad, and there are only "two options" for provinces to price carbon, as McKenna outlined.

McNeil, the Liberal premier of Nova Scotia, and Saskatchewan's conservative Premier Brad Wall both make the case that their provincial regulations and policies already price carbon. And they reject the notion that Ottawa can add a floor price on carbon emissions through more direct measures.

"Carbon pricing is already embedded in the cost of power — that's why we have some of the most expensive power in the country," McNeil said in a recent statement.

On Sunday, the Nova Scotia premier was asked on CTV's Question Period about McKenna's declarative definition of carbon pricing, and he in turn pointed to Trudeau's more expansive definition.

"Well the prime minister has also said equivalency matters," said McNeil.

"Every province is unique in how they reach that goal. Ultimately let's stay focused on what we want to achieve," he added, pointing to national reductions in emission. "Let provinces find their way of achieving that without imposing what you believe the solution is."

At the time of the Vancouver Declaration, Wall pointed out that the document's agreed upon carbon-pricing measures included "market transactions related to (carbon) mitigation technologies" — which, he said, included Saskatchewan's carbon capture and storage technology.

"We're doing that already, so that's easy to agree to," Wall said in March.

A federal-provincial working group of experts spent the summer working to define carbon pricing options, but it appears the political debate continues.