Cap-and-Trade and Carbon Pricing in Nova Scotia | Ecology Action Centre

Cap-and-Trade and Carbon Pricing in Nova Scotia

Effective and Equitable Carbon Pricing and Recommendations for the Nova Scotian Green Fund 

On January 1, 2019, Nova Scotia’s cap and trade program came into effect. It allows Nova Scotia to be compliant with the Federal Pan-Canadian Approach to Pricing Carbon Pollution. With cap and trade now in effect, the Provincial Government must now turn its attention to developing the green fund which will be a part of the program. 

 

Based on the regulatory framework for the program, the 21 companies required to participate in the cap and trade program are: 

 
  • Irving Oil Commercial G.P. 

  • Wilson Fuel Company Limited 

  • Sobeys 

  • Irving Oil Marketing G.P. 

  • Plains Midstream Canada ULC 

  • Enbridge Inc. 

  • Imperial Oil  

  • Highlands Fuel Delivery G.P. 

  • Heritage Gas Limited 

  • Suncor Energy Products Partnership 

  • Parkland Fuel Corporation 

  • Nova Scotia Power Inc. 

  • Valero Energy Inc. 

  • NGL Supply Co. Limited 

  • Northern Pulp Nova Scotia Corp. 

  • Superior Plus LP 

  • Elbow River Marketing Limited 

  • Lafarge Canada Inc. 

  • Cape D’Or Holdings Limited 

  • ExxonMobil Canada Properties 

  • Canadian National Railway 

 

 

Based on their emissions, participants are allocated a certain number of credits for free. The remaining credits needed to account for all emissions have to be purchased during an auction. The funds generated from these auctions will be put into a Provincial Green Fund. It is currently estimated that between $27- $32 Million will be generated each year, by auctions, and placed into the green fund. Based on the parameters set out by the Environment Act, the funds can be spent on 

  • Programs that further reduce GHG emissions 

  • Research and development, innovation or clean tech investments 

  • Programs to help mitigate higher costs of energy 

  • Public awareness and education on climate change 

  • Adapting to the impacts of climate change. 

The Provincial Ministry of Environment is currently developing the details of the Green Fund.  

The Ecology Action Centre advocates that if the provincial green fund is designed with a holistic and equitable framework, that it will have the capacity to decrease greenhouse gas emissions and influence job creation, population health, sense of community and belonging, and education in Nova Scotia. Ultimately, the green fund must be effective in continuing the reduction of greenhouse gases and be equitable. 

Jurisdictions globally, have implemented cap and trade programs with green funds. Existing cap and trade programs and green funds in CaliforniaQuebec and formerly in Ontario, as well as the Carbon Competitiveness Incentive Regulation in Alberta provide excellent lessons that can inform the Nova Scotia green fund. After completing a review on these jurisdictions, the EAC proposes the following considerations for the Nova Scotia cap and trade green fund: 

 

  • Funds should be spent on initiatives that have an explicit focus on integrated environmental and community health. These will have a larger impact on communities and the environment (Quebec, California). 
  • Regulations should include explicit language about the well-being of both the environment and communities, in order to achieve GHG emission reductions and to foster a green economy and community health (Alberta, California). 
  • Putting a price on carbon emissions can distribute costs unevenly across income groups and regions. How revenue allocation is designed, can either ease or exacerbate these distributional effects. This should be explicitly recognized in the green fund, so that the fund can subsequently allocate money to communities who are disproportionately affected (California).  
  • A portion of funds should be allocated towards technological development, industrial demonstration, challenges, and prizes because they can be used to leverage funding from other sources. This can contribute to an economic ecosystem that has the ability to support growth of the green economy and the creation of jobs (Ontario). 
  • Funds in other jurisdictions have tended to be put towards efficiency projects. Efficiency Nova Scotia has been doing much of the work that green funds in other jurisdictions have been funding. More funding should be allocated to Efficiency Nova Scotia so it can make bigger impacts in efficiency in the province. 
  • Projects in schools, should be funded as they are an educational opportunity for students. These opportunities contribute to public awareness and larger systemic behavioral change (California, Ontario). 
  • Communities who are already being disproportionately affected by climate change (low-income, underrepresented, people of colour) should be identified.  The it should be legislated that a dedicated portion of the green fund be spent directly on projects within these communities (California).  
  • Local community context should consistently be taken into consideration. Community projects and initiatives funded by a green fund should be participatory and collaborative and involve community in every step, in order to ensure the project meets the needs and the context of the community (California).   
  • A place-based cumulative framework that measures the economic, business, environmental and social impacts of green fund spending on a specific place should be developed to ensure there is a method to “measure what matters” to the community receiving funding (California). 
  • Specific parameters and requirements for how funds must be spent, reporting for recipients of the funds and who is eligible to issue funds should be developed in order to maintain transparency of the fund (Quebec). 

Ultimately, the green fund should be effective in reducing greenhouse gas emissions in an equitable way. This means creating a green fund that is explicit about including communities who experience low income and discrimination first and worst, that integrates environmental, social and economic well-being, that is place-based and finally that includes a framework for accountability and transparency.   

 

For more information on carbon pricing and cap and trade, please visit our past work on Carbon Pricing.

See the Ecology Action Centre's Media on Cap and Trade and Climate Action from 2019 here.

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