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New Brunswick Industrial And Electricity Carbon Polluters Off The Hook With Federal Carbon Pricing Plan Approval

Traditional Land of Wabanaki People/Fredericton – The federal government today announced its decision that New Brunswick, along with Quebec, British Columbia, and the Northwest Territories, meet the federal carbon pricing benchmark. The Conservation Council of New Brunswick points out, however, that meeting the federal test allows the province’s largest carbon emitters to pollute mostly for free. Consumers, on the other hand, continue to pay for all emissions due to driving. 

The federal government evaluates provincial carbon pricing proposals against its benchmark and its recent Output-Based Pricing System amendments requiring a two per cent per year tightening rate (also called a decline rate) starting in 2023. Provinces must adhere to the federal carbon price of up to $170/tonne by 2030, but also meet tests relating to emissions coverage, an emissions tightening rate, the use of offsets, and public reporting. 

Under the federally-approved provincial draft regulation, New Brunswick’s industrial polluters will pay a carbon price on greenhouse gas emissions above an annual emissions limit. In 2023, for example, the industrial emissions limit is 96 per cent or 4 per cent below 2020 levels. Each year thereafter, emissions should decline an additional two per cent per year so that by 2030, industrial emissions should be 82 per cent of 2020 levels (18 per cent lower than 2020 levels, Table 1 draft regulation). If a company exceeds its limit, it must secure credits from a company outperforming its limit, buy offsets or pay the carbon price. The result of these emissions intensity limits is that by 2030, industrial polluters in New Brunswick will not pay a carbon price on 82 per cent of their emissions.

Industrial facilities with annual greenhouse gas emissions of 50,000 tonnes or more are regulated under the provincial Climate Change Act. Companies covered by the provincial regulation include Irving Oil, NB Power’s Belledune, Bayside and Coleson Cove plants, regional landfills (Fredericton, Southeast, Southwest, and Fundy regional landfills), Irving Pulp & Paper, Irving Paper, AV Group NB Inc. – Nackawic Mill, and Graymont (NB) Inc. – Havelock plant. 

Electricity sector emissions have a tonnes of CO2 equivalent per gigawatt hour of production limit (CO2e/GWh) set for each fuel NB Power uses. Emissions from burning solid fuel like coal are scheduled to fall an average two per cent by 2029, compared to 2022 (ranging from zero to 5.2 per cent depending on the year, Table 2 draft regulation) before reaching near zero in 2030 (1 t/CO2e/GWh). The draft regulation shows no greenhouse gas emissions declines from oil use at Coleson Cove (liquid fuels) after 2023 (668 tCO2e/GWh each year until 2030). Average reductions by 2030 for natural gas are six per cent between 2023 to 2030, compared to 2022, with most of this reduction scheduled for 2030 (395 tonnes CO2e/GWh in 2023 falling to 370 t CO2e/GWh in 2027 and 240 tCO2e/GWh in 2030). The result of these fuel-based limits is that compared to 2022, electricity polluters will not pay a carbon price on 92 per cent of their emissions. 

Leading climate scientists conclude that the world must rapidly reduce the pollution unbalancing the climate by at least half by 2030 to stave off dangerous levels of the global warming fueling weather extremes, with global emissions peaking no later than 2025. The world is on track to increase emissions by 2030 and toward almost three degrees of global warming. Of all the potential cost-effective contributions to solve climate change, the IPCC, based on a review of thousands of peer-reviewed scientific papers, concludes that the future energy system runs on wind, solar, and energy efficiency and that nature protection is the way to absorb carbon through natural processes. 

“The cost-of-living crisis and the climate crisis have the same root cause: expensive oil and gas, as we see with NB Power’s rate increase application of almost nine per cent due primarily from burning coal, oil and gas. And both have the same solution: affordable, reliable, renewable energy. Reliance on oil and gas is driving up our bills, making it harder to provide for our children today, while worsening climate change and threatening their future,” says Louise Comeau, Director of the Conservation Council’s Climate Solutions program.

“We need to use more electricity to power our lives but it must be produced with low-cost renewable energy, supported by energy efficiency, storage technologies, and interties to support electricity trade.” 

The federal government will soon release a draft clean electricity regulation to achieve a net zero grid by 2035. Federal and provincial carbon pricing plans do not encourage a future electricity system regulated to require near zero emissions by 2035. The Conservation Council urges the federal government to remove the electricity sector from the Output-Based Pricing System so carbon pricing applies to all greenhouse gas emissions. This carbon pricing treatment would ensure that the economic signals driving NB Power’s dispatch model do not favour fossil fuels and paying the carbon price as is proposed for 2023-2024. In that fiscal year, NB Power proposes to pay $22 million in carbon pricing, a $17.6  million increase over the $4 million paid in 2021-2022. This counter-intuitive outcome is due to higher prices for imports, favouring increasing export income, according to NB Power’s recent application for an 8.9 percent rate increase (Matter 541, Energy Utilities Board). 

The Conservation Council also urges the province to accelerate efforts to develop a clean electricity strategy so that by the end of 2023 there is a plan to secure a near zero electricity system by 2035 and for electrifying our economy. The foundation of a provincial strategy should include redirecting all or most of the carbon pricing revenue to investments in emissions reductions, renewable energy, and energy efficiency to ensure that households, industry and the electricity sector can transition to non-polluting options. The whole point of carbon pricing is to shift to non-carbon options. A carbon price is a tax no one needs to pay.

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To arrange an interview, please contact:

Jon MacNeill, Communications Director | jon.macneill@conservationcouncil.ca | 506.238.3539

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