Future carbon tax could spike gas, electricity prices in Nova Scotia, leaked documents suggest

Nova Scotia's environment minister and department officials have been tight-lipped about what new carbon pricing for the province could mean in 2023 and beyond, but internal government documents show big changes could be coming.

Documents obtained by CBC News show that if Nova Scotia opts for a federal carbon tax, it could add 40 cents to the price of a litre of gasoline by 2030 and increase the price of electricity by a compound average of 17.5 per cent from 2023 to 2030.

Premier Tim Houston and Environment Minister Tim Halman told reporters Thursday they are not happy the documents were made public and they've instructed staff to investigate how it happened.

"I'm very concerned about that," Houston said following a cabinet meeting in Halifax.

"First off, it's old. Second off, it contains very, very sensitive information — information that has the potential to have an impact on the market."

CBC News received the documents, which are about a year old, on Wednesday. It says the province's Environment Department contracted Navius Research to analyze three options for future carbon pricing.

Since 2019, the province has priced carbon using a cap and trade program of its own making for industrial polluters. That program was able to avoid the sticker shock other provinces experienced with their own carbon price programs because of work the government has done through the years to develop renewable energy.

Nova Scotia's program, for example, added a little more than one cent to the price of a litre of gasoline. By comparison, the federal program, or backstop, added close to nine cents to the price at the pumps for other provinces.

Despite this, the documents recommend moving away from the internal cap-and-trade program because of a danger that participants will not be able to comply with pending regulations.

Beginning in 2023, the federal government is increasing the price of carbon by $15 per tonne until it hits $170 in 2030. Nova Scotia's government must have an agreement with Ottawa on one of three models by the end of the year: continuing with cap and trade; a straight carbon tax; or a hybrid of the two.

Halman insisted on Thursday that his government still has not settled on which option it will choose, but he and Houston said there's enough time to get a new deal in place with Ottawa by the end of the year. Affordability for Nova Scotians is the top priority for whatever pricing model is selected, the minister said.

"This is probably the biggest public policy decision I think I may ever be a part of. So we want to make sure we get this correct and in order to do that, you need to take that time to do that analysis."

While Halman said that analysis won't be shared with the public until the government settles on what carbon-pricing model it will select, the internal documents outline what the stricter federal guidelines could mean for Nova Scotia.

The continued use of an internal cap and trade system, for example, is estimated to generate $196 million in revenue by 2030. It would add 6.8 cents to the price of a litre of gas by 2030 and increase the price of electricity by a compound average of 3.2 per cent from 2023 to 2030.