Concerns linger as carbon tax inches to implementation

On September 1, a made-in-the-north carbon tax will sweep into effect across the territory, but some MLAs are wary of its impacts.

The legislative assembly's standing committee on government operations is slated to review the new rules surrounding the tax beginning Aug. 1. This will include the pricing of greenhouse gasses at $20 per tonne, before it is expected to annually increase to $50 per tonne in 2022. The plan rebates heating fuel and doesn’t apply to aviation fuel.

As committee prepares to make final adjustments to the tax plan, Premier Bob McLeod has allied himself with five Conservative premiers (New Brunswick, Ontario, Manitoba, Saskatchewan, and Alberta) who oppose carbon pricing and wider federal environmental rules.

In June, McLeod and the group of premiers signed a letter slamming federal environmental bills C - 69 and C- 48. The latter bill overhauls federal assessment of major development projects, while the former bill officially bars oil tankers from ports on the northern coast of BC. Earlier this month, those five premiers also donned cowboy hats and flipped pancakes at the Calgary Stampede to showcase their cooperative approach to economic development and investment of natural resources within Canadian federation.

McLeod, who was unavailable for comment for this story, is the only one of those opposing premiers to have a made-in-the-North carbon tax ready for roll-out.

Still, he has expressed some reservations.

Speaking to the National Post on July 11, McLeod noted NWT’s economic reliance on natural resources and said there are no real alternatives to the diesel fuel that is heavily used in many communities throughout the NWT. Carbon pricing, meanwhile, only adds another tax onto the territory’s already high cost of living, he said.

"First and foremost, the concern was we don’t have any alternatives right now, or right away. So, essentially, it would just be another tax, increased tax, and the cost of living is already very high," McLeod told the National Post. “We’re (Northerners) affected the most by climate change, yet our emissions are minimal, it doesn’t have any effect.”

'Playing it both ways'

Frame Lake MLA Kevin O’Reilly told News/North last week that Premier McLeod is “trying to play it both ways: please his Conservative Party friends who are premiers and trying to get money out of the federal Liberals (government) for infrastructure and energy products.

“You just can’t play it all ways,” O'Reilly said, reiterating previous criticism of McLeod’s lack of consultation with regular MLAs ahead of denouncing the federal environmental bills.

McLeod, however, is proceeding with the tax, under which  large emitters will get a 72 per cent rebate on their carbon tax, while another 12 per cent will be placed in individual trusts that the operators can access to invest in further greenhouse gas reductions.

Cabinet will manage the remaining funds.

“I just don’t think this creates the kind of certainty people are expecting and (that) it leaves too much control in the hands of cabinet and the minister of finance without it being done in a very transparent, clear fashion,” O’Reilly said, noting little public reporting in the process.

Currently, the territory’s energy strategy largely hinges on an expansion of the Taltson hydro-electricity project, which the government says will cut industrial emissions by 224 kilotonnes, or 44 per cent of its overall target.

Federal investment and buy-in, however, is critical.

"Without federal support for Taltson, the NWT will not be able to reach its target," the government states in its 2018 energy strategy.

Building a regional South Slave economy

O’Reilly said Taltson power should go toward building a regional economy in South Slave, not expanding the system and further impacting the environment when there's a lack of buyers and “no one interested in the power in the first place.”

In committee, Environment Minister Robert C. McLeod has also acknowledged there are currently no buyers for the power, but insisted on the chance to make a business case to Canada.

The GNWT recently approved $50,000 — with an additional $150,000 from Ottawa — to develop this case. The federal government, in its 2018 budget, also approved $18 million over three years to support planning for the project.

O’Reilly said the expansion wasn’t “even a real project.”

Nahendeh MLA Shane Thompson said the hydro-electricity project is “great,” but it will have minimal effect on his riding. He instead pointed to the rebate portion residents would complete at tax time, creating “more costs for [communities] to do their traditional way of life.”

He told News/North small communities weren’t seeing investment in expanding solar panels or exploring alternatives like geothermal power, which involves drilling deep into the earth for heat to boil water that produces steam powering turbines.

Yellowknife North MLA Cory Vanthuyne is chair of the legislative assembly's standing committee on economic development and environment, which helped develop the territory’s plan.

He said the territory has had success with windmill installations in Inuvik and Diavik, and solar panels places in the communities. Future debates, however, will likely centre on the NWT Power Corporation, which he called the “elephant in the room” for the next assembly.

While there are successful local projects like solar panels in Colville Lake, which have knocked diesel consumption down by 20 per cent, expanding projects like this will involve reckoning with existing infrastructure, he said.

“We have a built up infrastructure with the power corporation that costs so much every year in operating and maintenance dollars. If you start depleting that without a plan, it’s going to cause a lot of disruption,” he said.

He said that while a large carbon tax may be appropriate in the south, the North lacks the energy options for pricing to change consumers' behaviour.

“Somehow the federal government felt we need to put some behavioural tax on the people of the Arctic to change the way they do their day-to-day affairs when really we have zero options to consider,” he said.