Nova Scotia sets the stage for its cap and trade regime, with targets to come

Nova Scotia tabled legislation Friday that sets the stage for its promised cap and trade regime, although specific details on the regulations and the effect on consumers are yet to be known.

Premier Stephen McNeil's Liberal government opted for a cap and trade system last November as part of Ottawa's push to get the provinces to set a price on carbon.

It came out of an agreement that saw the federal government recognize work that Nova Scotia has already done on greenhouse gas reductions. The province has already met Canada’s target of a 30 per cent reduction in emissions from 2005 by 2030.

McNeil said the goal of the system being set up in his province is to achieve targets for further greenhouse gas reductions with minimal impact to consumers, although he couldn't say what the ultimate cost to their pocketbooks would be when it comes to things like buying gasoline for vehicles.

"I can't predict what's going to happen down the road," McNeil told reporters.

"I certainly know that we believe this was the best way for the residents of Nova Scotia to get the benefit of the work they have been doing all along. This smooths it out across all sectors."

Government officials said the goal would be to set declining greenhouse gas caps each year until 2022 that would correspond to projected emissions levels resulting from the federal government setting a carbon price that will rise to $50 a tonne by 2022. That price will be set at $10 a tonne beginning next year.

The amendments to Nova Scotia's Environment Act don't set caps yet, for a system that is expected to begin in late 2018. Government officials said they would need to set an economy-wide emissions target by 2030.

When cap and trade begins, about 20 large industrial players will be mandatory participants and will initially be offered emission credits at no cost.

Officials said that's to guard against industries suddenly picking up and moving, adding that similar regimes set up in Ontario, California, and the European Union have also offered so-called free allowances.

Nova Scotia's legislation also sets out that the province will go it alone, although McNeil said that doesn't mean there couldn't be some sort of regional arrangement in the future. Prince Edward Island, New Brunswick and Newfoundland and Labrador have not yet announced their systems.

"Those provinces will determine what works for their citizens. If our sister provinces turn to cap and trade I hope they look at what we have done and if there is something we can do we'd be happy to do it."

Ontario and Quebec have a linked cap and trade system with California — something Wayne Groszko, of the Halifax-based Ecology Action Centre, believes only makes sense.

"Why are we doing this alone? A cap and trade system works best — this is proven — when it involves a wider jurisdiction and more trading partners, so why not be joining the other Maritime provinces?"

Groszko also said that without caps there is no way to tell at this point whether the system will further reduce emissions.

He also questioned the offering of free credits up front.

"They should be charging money for the permission to pollute . . . and then using that revenue to soften the blow to people who really need it like low income folks, and also investing in green programs like public transit," he said. "All those things that we need in order to actually reduce our emissions."

Under the regulations, which are a work in progress, a small number of credits will be held in a strategic reserve. Once sold, the money collected would be put into a Green Fund that would support climate change initiatives and innovations.

The government said the reserve credits would be sold at a higher price than the market in order to create a cap that would prevent participants from driving up the market price for credits.

The regulations would also set penalties for non-compliance.