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Revenue from NB's industrial carbon tax flows back to issuers as subsidies

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Environment Minister Gary Crossman told a parliamentary committee that the money would be used to encourage big industry to reduce its emissions.  (Jacques Poitras/CBC – photo credit)

Environment Minister Gary Crossman told a parliamentary committee that the money would be used to encourage big industry to reduce its emissions. (Jacques Poitras/CBC – photo credit)

The New Brunswick government collected $18 million in industrial carbon tax revenue from the province's biggest emitters last year – money it plans to give back to them in the form of subsidies this year.

Environment Minister Gary Crossman said the revenue would be used to incentivize big industry to help them reduce their emissions, which the carbon price itself is designed to do by making emissions more expensive.

“The money collected through the performance-based pricing system will be used to fund industry improvements to reduce its greenhouse gas emissions,” Crossman told a legislative committee reviewing his department’s budget.

The minister said last year was the first year the government collected revenue through the performance-based pricing system, a federally mandated, provincially operated system that applies to New Brunswick's largest emitters.

Figures show the system brought in $12.8 million from the electricity sector and $6.4 million from industry.

That's far less than the $170 million consumers paid in the province's carbon tax in 2022-2023, the last full year the New Brunswick consumer tax was in effect before the federal system she replaced.

Under the province's industrial pricing system, the government has set an emissions standard for each emitter and requires them to reduce greenhouse gas levels by two percent each year until they reach 82 percent of the standard in 2030.

Irving Oil, New Brunswick's largest greenhouse gas emitter, says it will partner with TC Energy to work on this "Decarbonization" its current assets.Irving Oil, New Brunswick's largest greenhouse gas emitter, says it will partner with TC Energy to work on this "Decarbonization" its current assets.

Irving Oil, New Brunswick's largest greenhouse gas emitter, says it will partner with TC Energy to work on “decarbonizing” its current facilities.

The Irving oil refinery in Saint John was the province's largest greenhouse gas emitter in 2021. (Shane Fowler/CBC)

Issuers that exceed these targets must pay the province for any emissions above the threshold or purchase tradable credits from other issuers who earn them by meeting the targets.

Critics say this effectively means they will not be taxed on 82 percent of their emissions.

“We already protect them from the full carbon tax,” said Moe Qureshi, director of climate research and policy at the Conservation Council of New Brunswick.

Provincial officials said a tougher carbon price on industry would jeopardize New Brunswick companies whose foreign competitors are not subject to such taxes.

Crossman said emitters covered by the pricing system would “apply for funding for projects that reduce greenhouse gas emissions” and his department would evaluate them “on a performance basis.”

Opposition MPs criticized the return of the money.

Liberal environmental critic Gilles LePage criticized the move and questioned why the money would be given directly back to companies that were supposed to finance their own emissions reductions.Liberal environmental critic Gilles LePage criticized the move and questioned why the money would be given directly back to companies that were supposed to finance their own emissions reductions.

Liberal environmental critic Gilles LePage criticized the move and questioned why the money would be given directly back to companies that were supposed to finance their own emissions reductions.

Liberal environmental critic Gilles LePage questioned why the money would be given directly back to companies that should be financing their own emissions reductions. (Ed Hunter/CBC)

“Why do we collect it and then give it back to large industries that have the means to do their own mitigation process? [for emissions]” asked liberal environmental critic Gilles LePage, who called the idea strange.

“It could have been distributed somewhere else to ease the burden on some others who can’t afford to do it.”

Green MLA Kevin Arseneau called the plan “corporate welfare” and said the revenue would have been used to fund emissions reduction projects that would benefit the entire province, such as public transportation.

“What's the idea of ​​sending this money back to industries that make millions and millions in profits every year?” he said.

Qureshi said the money could also fund power transmission upgrades so that renewable, non-emitting power could be traded more easily between provinces, improving its business case.

LePage said the province should disclose which major emitters paid for exceeding their targets.

“This should be public,” LePage said. “Hopefully we’ll see these names in some kind of report.”

All 15 major issuers under the scheme are eligible to apply for funding, regardless of whether they were required to pay or not.

About a quarter of all climate-damaging emissions in New Brunswick come from large industry. Twelve large private facilities and three NB Power power plants are covered by the system.

Irving Oil's refinery in Saint John was the largest greenhouse gas emitter in the province in 2021, the most recent year for which data is available.

This was followed by NB Power's Belledune coal-fired power plant, two other power plants in Saint John and the AV Group plant in Nackawic.