Rebuffed by feds, P.E.I. determined to cut pollution — and payments to Ottawa

P.E.I.'s Environment Minister Steven Myers proposed a three-year "ease-in" period to start applying the province's carbon tax on home heating oil in an email to his federal counterpart Steven Guilbeault dated Sept. 14. Ottawa rejected that proposal.

That was 12 days after Ottawa's deadline for the provinces to submit new plans for carbon pricing, and a week after the feds had told P.E.I. its initial proposal could lead to Ottawa imposing its federal backstop program in the province.

Last week, Ottawa announced it would do just that in P.E.I., Newfoundland and Labrador and Nova Scotia.

Myers's previous proposal, according to a series of emails the minister shared with local media, sought to maintain heating oil's exemption from carbon pricing in the province, and to freeze carbon pricing on other fuels in P.E.I. at the 2022 level of $50 per tonne of emissions "until costs become reasonable again."

"In the recent months, we have seen record high gasoline prices on Prince Edward Island — yet consumption has increased," Myers wrote to Guilbeault in an email dated Sept. 2, "which shows that transitioning Islanders to cleaner methods of transportation is required if we truly want to reduce emissions."

In the same email, Myers said P.E.I. isn't opposed to a carbon tax. "In fact, we support the federal policy initiative."

But he said charging the carbon tax on heating oil, which this year has reached record-high prices, "will put low income households at an economic disadvantage."

The same day P.E.I. switches to the federal carbon backstop program for fuel pricing on July 1, 2023, the price on carbon will jump to $65 per tonne.

That means the tax as applied that day on heating oil, which will no longer be exempt on P.E.I., will be 17.4 cents per litre.

Offsetting that, Islanders will start receiving quarterly carbon rebates from the federal government. Those payments will start off at $960 per year for a family of four.

P.E.I. has a program to provide free heat pumps to households with incomes under $55,000, and last week the federal government announced a similar program of its own.

But Myers said it would take another three or four years to complete the province's transition from oil to electric heat.

His pitch to Guilbeault — after the province's initial proposal was shot down — was to start charging $30 per tonne of emissions on furnace oil in 2023, which would start the tax off at eight cents per litre, doubling that in 2024 before catching up with the federal carbon price in 2025, which by that point would be $95 per tonne.

Among the conditions Ottawa was insisting on if P.E.I. was to maintain control of its own carbon pricing regime: