Canada’s northern territories warming to carbon pricing

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Story from Carbon Pulse

They may be laying out conditions and aggressively pushing for exemptions, but Canada’s three northern territories appear to be warming to the idea of carbon pricing.

With a combined population under 120,000 spread over 3.87 million km2 (1.5 million sq mi), the trio are responsible for a tiny fraction of Canada’s emissions – some 1.8 million tonnes of CO2e or 0.25% in 2014.

But last year, the Canadian federal government directed all 13 provinces and territories to introduce some form of carbon pricing by 2018, indicating that the country’s frozen north was also expected to contribute to meeting the country’s greenhouse gas reduction targets.

Under Ottawa’s plan, provincial and territorial governments can choose between a carbon tax, starting at C$10/tonne and rising to C$50 by 2022, or a cap-and-trade scheme that must cut its annual emissions cap at a rate similar to the reductions experienced under a tax.

The three territories, as well as Saskatchewan, initially voiced their vehement opposition to the strategy, but some of that resistance seems to be thawing.

In a Mar. 8 statement to the Northwest Territory’s Legislative Assembly, the region’s Finance Minister Robert McLeod said that during workshops on the territory’s forthcoming Climate Change Strategic Framework, locals had expressed some concern but were conditionally in favour of some sort of pricing mechanism.

“A key issue raised was residents’ concerns that a carbon tax will add to the already very high cost of living, create an additional barrier to economic development and add to the already high cost of operating a business in the Northwest Territories,” he said.

“At the same time, residents expressed a level of acceptance of a carbon pricing scheme if some of the revenues received are allocated to improving energy efficiency in communities, getting communities off diesel and moving towards more renewable energy systems.”

Ottawa has promised to work with the three northern territories to address their “specific challenges”. The territories, with their arctic climates, remote populations and natural resource-reliant economies, are heavily dependent on imported fossil fuels for energy and have a high cost of living.

Northwest Territories (NWT) is preparing a strategic framework on climate change designed to replace its greenhouse gas strategy that expired in March last year.

According to the government, this strategy will explore “whether carbon pricing is an effective and appropriate emissions mitigation tool for the NWT”, as well as other approaches to tackling climate change.

The government has been consulting with local communities since November and has one further meeting to complete before releasing its strategy, which is expected to come later this month.

In a Mar. 1 debate on carbon pricing in the Legislative Assembly, Premier Bob McLeod promised that the territory’s strategy on carbon pricing would be completed “well before” 2018, but said he could seek exemptions for certain fuel types.

The finance minister went further than that, suggesting that exemptions could be “one approach” to the pricing mechanism and saying that rebates or tax credits could help to mitigate the impacts imposed by the price, though it had not been decided whether carbon price proceeds would be reinvested in developing alternative energy sources.

“Warming here is twice what you have in other parts of the world and we’re really the canary in the coalmine. There’s a high cost to adapting, so we should be leaders in this,” Craig Scott, executive director of Ecology North, an environmental NGO in the Northwest Territories, told Carbon Pulse.


Meanwhile to the west, Yukon reversed its position in Nov. 2016 when Sandy Silver, a pro-carbon pricing Liberal, was elected premier, ousting former leader Darrell Pasloski, a staunch opponent of Ottawa’s carbon price plan.

The territory will not design its own carbon tax as this would require a referendum, “and that would just further polarise the whole debate”, Silver told Yukon News in December.

Rather, the territory will wait for the federal government to impose a carbon tax, he said, adding that all revenue will be returned to Yukon and rebated to residents, a pledge on which Silver campaigned.

But the Yukon Chamber of Commerce, which represents businesses, last week recommended that the government instead establish an independent third party body, the Yukon Green Energy Trust, to manage the proceeds from carbon pricing.

Such revenue should specifically target reducing fossil fuel consumption and developing more renewable energy, it said, adding that a private sector steering committee should also be formed to allocate the proceeds.

The chamber also wants the Yukon government to work with the other territories to convince Ottawa to allow the trio a lower or delayed set of emission targets, and according to CBC it is worried that the tax will widen the disparity between public and private sector wages, the former of which is calculated based on the cost of living.


And across Canada’s north to the east, Nunavut has also put up some opposition to carbon pricing but appears open to the federal government scheme.

There have been discussions with Ottawa over certain exemptions for the territory, including emissions from heating fuel, the power sector and airline fuel, Premier Peter Taptuna said in February.

But the idea of a carbon tax has been met with resistance by gold mining company Agnico Eagle, which warned Taptuna that a carbon tax would deter further investment in the territory.

A handful of provinces have outlined their carbon pricing plans since the federal government’s announcement last autumn, and barring any legal challenges, the rest are expected to introduce their own proposals in the coming months.

By Sophie Yeo –