N.B.'s industrial carbon tax revenue will return to emitters as subsidies

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

Environment Minister Gary Crossman said the revenue will be used to provide incentives to big industry to help them lower their emissions, something the carbon price itself is supposed to do by making the emissions more expensive. 

"The money collected by the output-based pricing system is being used to fund improvements by industry to reduce their greenhouse gas emissions," Crossman told a committee of the legislature reviewing his department's budget.

The minister said last year was the first year the government collected revenue via the output-based pricing system, a federally required, provincially run 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 provincial carbon tax in 2022-23, the final full year the New Brunswick consumer tax was in place before the federal system replaced it.

Under the provincial industrial pricing system, the government established an emissions standard for each emitter and requires them to reduce greenhouse gas levels by two per cent each year until 2030, when they must reach 82 per cent of the standard.

Emitters that exceed those targets must pay the province for any emissions above the threshold, or buy tradable credits from other emitters who earn them by meeting the targets. 

Critics say this in effect means they're not taxed on 82 per cent of their emissions.

"We're already shielding them from the full carbon tax," said Moe Qureshi, director of climate research and policy for the Conservation Council of New Brunswick.

Provincial officials have said a more stringent industrial carbon price would threaten New Brunswick companies with foreign competitors not subject to such taxes.

Crossman said emitters who come under the pricing system will apply "for funding for projects that reduce greenhouse gas emissions," and his department will evaluate them "on a merit basis."

Opposition MLAs criticized the handing back of the money.

"Why are we collecting it and then giving it back to large industries who have the means to do their own mitigation process [for emissions]?" asked Liberal environment critic Gilles LePage, who called the idea weird.