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Carbon tax will raise Nunavut electricity costs, QEC boss says

Nunavut premier looks at the idea of a carbon tax “rebate”

By JANE GEORGE

Power plants like this one in Iqaluit produce electricity by burning diesel fuel which releases CO2 into the atmosphere. A federal carbon tax, designed to reduce these emissions, is expected to increase the cost of electricity in Nunavut. (FILE PHOTO)


Power plants like this one in Iqaluit produce electricity by burning diesel fuel which releases CO2 into the atmosphere. A federal carbon tax, designed to reduce these emissions, is expected to increase the cost of electricity in Nunavut. (FILE PHOTO)

A federally-imposed carbon tax designed to reduce the use of climate-warming fossil fuels will soon see Nunavummiut paying more for electricity, says Bruno Pereira, the president and CEO of the Qulliq Energy Corp.

For QEC customers, this tax means bills will increase by an average of about $100 per year, Pereira said at a recent breakfast meeting with the Iqaluit Chamber of Commerce.

The additional amount that customers will pay will likely increase to $700 a year by 2022, he said.

That’s because the federal government, through the Pan-Canadian Framework on Clean Growth and Climate Change, wants carbon-producing fuels, including diesel, to face an additional tax of $10 per tonne starting in 2018.

That surcharge would rise to $50 per tonne of emissions by 2022.

A carbon tax would increase costs for the roughly 15,000 customers of the QEC, which produces 150 kilotonnes of greenhouse gases from the diesel-powered plants that provide electricity throughout Nunavut, Pereira said.

Provinces and territories that don’t create their own carbon pricing system, either through a direct carbon tax or a cap-and-trade market system, will have a “backstop tax” imposed on them, the federal government has said.

The law that will make that happen is contained in the Liberal government’s omnibus budget bill, which is still making its way through Parliament.

Late last year, the federal environment minister, Catherine McKenna, said territories and provinces that do not have their own carbon pricing regime, such as Nunavut, have until the end of this year to comply.

If not, they will have a “backstop tax” imposed on them in 2019. The federal government has promised that any revenues raised in a particular province or territory will stay in that jurisdiction.

But Ottawa would end up deciding how that money is spent. The federal Liberals have said they would prefer to send rebate cheques to residents and bypass territorial or provincial governments.

Nunavut does not yet have a carbon pricing plan, but Nunavut Premier Quassa said in the legislature May 24 that Nunavut wants to be “exempt from the carbon tax.”

Though he offered few details about what will happen in Nunavut, Quassa suggested Nunavut could receive a “rebate” from Ottawa.

“We indicated that we opposed the carbon tax for Nunavut. We will look at the tax rebate and not pay carbon tax as the Nunavut government,” Quassa said in response to questions from Aivilik MLA Patterk Netser.

Netser had asked Quassa for details on how Nunavut plans to deal with the new tax and its impact on Nunavummiut.

“Everything will increase in price and the government will be collecting taxes from us as consumers. The price of everything we purchase will go up due to the carbon tax. It’s obvious that we will be paying more,” Netser said.

Netser also wanted to know how much carbon tax revenue GN expects to receive, “not just the airlines, snowmobile drivers, vehicles, this house, homeowners, schools, and power plants.”

But Quassa said he didn’t know the answer to that question.

“I can’t tell you specifically how much revenue we could expect. We will only find how much we would expect to receive after this has been implemented,” Quassa said.

In 2016, the previous territorial government, along with the other two northern territories, said Ottawa should take into account the unique circumstances of their jurisdictions.

And a carbon tax rollout would be “another blow” to northern development, and could deter the development of northern mines, Agnico Eagles Mines Ltd., said last year.

In the Northwest Territories, which has published detailed studies on the impact of a carbon tax, the plan is to add the tax to all carbon-based fuels sold in the N.W.T.

The Government of the N.W.T. plans to recycle carbon tax revenue back to N.W.T. residents and the economy through redistributive mechanisms like tax reductions, rebates and subsidies that the they are still studying.

Correction: An earlier version of this story stated that Nunavut’s diesel power plants produce 150 tonnes of greenhouse gases each year. The correct amount is 150 kilotonnes.

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