In order to avoid the worst effects of the climate emergency, Canada needs to accelerate a transition away from fossil fuels. A shift to sustainable energy solutions will help stabilize energy costs by shielding Canadians from volatile oil and gas market fluctuations. However, the transition to a clean energy economy must not fall on the backs of low to medium-income households, and it must ensure that big polluters pay their fair share.
The federal carbon pricing plan (or carbon tax) is an instrument to help shape Canada’s energy market and provide funding for a transition to a clean energy economy. It will apply to all provinces and territories, but will be tailored to each location. While this particular system is new to N.S., the federal carbon tax replaces the existing cap-and-trade pricing system that ends in December 2022. Similar plans have been used all over the world as a means to help transition our energy systems.
Each province was given the opportunity to submit a carbon pricing scheme comprised of an output-based pricing system (OBPS) for large emitters and a carbon tax or levy on fuel. While the Government of Nova Scotia provided an OBPS that was approved, it failed to submit a plan for a tax on fuel, which means the federal tax – known as the federal backstop or federal fuel charge – will apply.
In November 2022, the federal government announced it would delay the federal fuel charge under its carbon pricing plan in N.S. until July 1, 2023, and offer a $5,000 rebate for low-income homeowners to transition from fuel-oil heating systems to electric heat pumps. This six-month extension on the federal fuel charge is meant to help address affordability concerns through the winter, when home-heating costs are at their highest, allowing Nova Scotians to take advantage of measures and incentives to move to more sustainable options. When the carbon tax does come into effect, roughly eight in 10 Canadians are expected to receive more in federal rebate cheques than they pay into the carbon tax.
The Ecology Action Centre is pleased to see the federal government announce measures to make the transition to a low-carbon future more affordable. It will take time for market changes and consumer benefits to accrue from carbon pricing, and we must ensure that communities are taken care of in the interim.
But these measures are just small pieces of a larger framework that must include well-funded and easily accessible energy conservation programs for homes, offices, institutions and everyone living in Canada. This requires increased funding, capacity and access to support for consumers, along with the implementation of sales targets for electric vehicles in provinces like N.S., within the forthcoming national zero emission vehicle standard.
Canadians can’t be expected to make sustainable choices unless government ensures easy access to sustainable technology and financial supports. While the federal government has provided funding for some of this, more is needed to ensure a fair, comprehensive and integrated plan that leaves no one behind. The EAC hopes that the federal government’s announcements this month are the beginning of a broader strategic initiative that rewards moves toward sustainable energy use, while adequately supporting those that need it most.
- Click here to learn more about the Global Carbon Pricing Challenge.
- Click here to learn more about how carbon pricing works.