Carbon price backstop coming to P.E.I.

Federal price will mean three-centper-litre increase for gas, 17.4-cent-per-litre increase for home heating fuel

CHARLOTTETOWN – P.E.I. residents can expect to see a jump in gasoline and home heating prices next summer but can also expect to receive hundreds of dollars in rebate cheques.

The price increases will come about as a result of a federal government carbon pricing backstop, which will be imposed on Prince Edward Island, along with Nova Scotia and Newfoundland and Labrador.

Drivers will likely see an increase of at least 3.3 cents per litre for gasoline as of July 1, 2023. The federal backstop will also mean a much bigger increase in the price of home heating fuels, which have been exempt from carbon taxes since 2019.

Under this federal backstop, the price for home heating oil would increase 17.4 cents a litre while propane will increase 10 cents a litre as of July 2023.

That same month, most Islanders will receive hundreds of dollars back from the federal government in the form of rebate cheques. Starting in July of 2023, according to background documents provided by the federal government, an average family of four will receive quarterly rebate cheques of $240.

Annually this would work out to about $960 for a household consisting of two adults and two children. The rebate cheques will be tax-free. Rejection of P.E.I.’s proposal The imposition of a federal backstop in P.E.I. represents a rejection of carbon pricing plan submitted by the Dennis King government last September.

A letter sent to P.E.I.’s Environment Minister Steven Myers by federal Environment Minister Steven Guilbeault said the province’s proposal “does not align with the federal benchmark criteria.”

Speaking during question period on Nov. 22, King said the province had sought to maintain its exemption on home heating fuels, which will remain in place until July 2023. He pointed to the sky-high fuel price increases Prince Edward Island consumers have been saddled with over the last 10 months.

King also said the money collected through carbon taxes has funded climate change programs in the province, which he said had been successful. This included the province’s heat pump and active transportation programs.

“As Islanders, we’re supportive of carbon reduction. We used to be ninth worst in the Canadian provinces in terms of emissions; now we’re fourth. I think that speaks for itself,” King said.

Since the previous Liberal government of Wade MacLauchlan

negotiated the first carbon pricing agreement in 2018, millions of dollars of carbon pricing revenue have also been used to fund a provincial gas tax cut. This meant that drivers have been cushioned – to the tune of about 3.4 cents per litre – from the full carbon price since 2019.

The new federal backstop could mean provincial gas taxes may increase back to 2018 levels.

In his letter, Guilbeault said the receipt of some of the carbon pricing revenue would be “conditional on Prince Edward Island maintaining its commitment not to take actions that directly offset, reduce or negate the carbon pollution price signal.”

It is unclear if the P.E.I. government will increase its provincial gas taxes next summer.

A carbon levy is meant to change consumer behaviour over the long term by increasing the cost of polluting, while incentivizing lower polluting options.

But speaking to reporters after question period, King said Island consumers are more dependent on fossil fuels to heat homes than people in other provinces. He said the province’s heat pump incentive programs have helped reduce the percentage of households that rely on fossil fuels from 92 per cent to about 56 per cent.

He also said most rural Islanders rely upon their vehicles to commute, despite the province’s recent investments in transit.

“Essentially what we’ve been trying to say to Ottawa all along is, we’re not buying this because we want to pollute, we’re buying this because right now there are no other alternatives,” King said.

GREENS APPLAUD FEDERAL BACKSTOP

Speaking to reporters, Green Opposition Leader Peter Bevan-Baker said he was happy to see the federal carbon pricing program imposed on the province.

“Finally (Island households) are going to receive the full rebate that they deserve and have deserved for as long as the carbon tax has been in place,” Bevan-Baker said.

“They have literally forgone thousands of dollars over the last few years that, had we had this program in place, would have been returned directly to Islanders into their pockets.”

Since the 2019 election, the P.E.I. Greens have advocated for a “revenue neutral” carbon price, in which all the revenue is returned to Islanders in the form of rebate cheques.

Bevan-Baker also said the recent price fluctuations in the price of fuel are likely to continue in a decarbonizing world.

“Let’s be clear: the volatility in the marketplace regarding fossil fuels is not going away,” Bevan-Baker said.

“And the best way to deal with that, when you have the jurisdiction as a province like P.E.I. does, is to get us off fossil fuels as quickly as we can and move us to clean energy.”