There Is No Basis For Ottawa To Impose A Carbon Tax on Nova Scotia

National governments everywhere have been busy making carbon intensive resources less available and more expensive. They have been less effective in providing cost-effective replacements.

Thus President Joe Biden cancelled the permit allowing the Keystone XL pipeline to cross the border from Canada into the United States on his first day in office. This month he went as supplicant to visit Crown Prince Mohammed Bin Salman (MBS), seeking to increase production of Saudi oil, which would reduce prices. MBS, directly linked to the murder of Washington Post journalist Jamal Khashoggi in Istanbul in 2018, has until recently been treated as a pariah.

After the Fukushima nuclear accident in 2011 the normally sensible Germans, prodded by Green politicians, pushed to close Germany’s nuclear and coal-fired power plants. With renewables unable to fill the gap, they turned to Russian gas to produce electricity, heat homes, and run factories.

A ban on hydraulic fracturing prevents Germany from tapping its own shale gas reserves and importing liquified natural gas from North America. That has become disastrous since the Russian invasion of Ukraine. Electricity rates in Germany have skyrocketed.

Two years ago Prime Minister Trudeau promised the Atlantic Loop “that will connect surplus clean power to regions transitioning away from coal.”  To date we have not even seen a plan.

German Chancellor Olaf Scholz hopes Canadian liquefied natural gas (LNG) will help Germany shift away from Russian gas imports. But Prime Minister Trudeau this week dismissed the idea of building LNG terminals on the east coast to supply Europe.

Both leaders have expressed enthusiasm for the potential of “green” hydrogen to be extracted using massive wind turbine installations in Atlantic Canada. Shipped to Europe as ammonia, the hydrogen can generate emissions-free electricity.

This interesting idea is being advocated by several well-heeled investors. Environmentalists, who are experts in causing delays, have already expressed their opposition. With so many projects being launched there are bound to be supply chain issues. If it is a go the first project completion will be well beyond the suggested launch in 2025.

On a more timely track, Nova Scotia has just completed a tendering process for renewable electricity. Customer First Renewables, the independent manager of the project, advises that 15-20 wind-based proposals were received, of which five were selected.

Solar operators expressed interest in competing but none of them was successful. It is not clear that any of them bothered to bid. This confirms in the clearest possible way that solar is not cost-effective in Nova Scotia’s climate. Why then did federal, provincial, and municipal governments announce a $22.4 million expenditure on “solar gardens” in Antigonish, Berwick, and Mahone Bay?

These small-scale projects will be even less efficient than commercial versions. Worse, they occupy valuable land. In Mahone Bay there is controversy over the location. The town wants to expropriate land from private property owners rather than use its own available land.

Surely, viable land that is less expensive can be found elsewhere in Nova Scotia. This high-cost virtue showing is the wrong way to promote renewable electricity.

At a wholesale rate of 5.3 cents per kilowatt hour, the wind projects provide a cost-effective addition to the province’s fleet of generation sources and make it possible to retire coal-based facilities.

The federal government contributed $130 million for batteries that facilitate intermittent sources of power. This will reduce the cost to ratepayers. To a lesser extent so will the $125 million provided to indigenous groups to ensure that five projects in which they had majority ownership would win the five placements. But the process could have produced five viable candidates without the federal involvement.

Shortly after taking office, Trudeau cancelled the Energy East pipeline that would have provided energy security to eastern Canada. Gasoline in Calgary this week costs about $1.40 per litre, including 11 cents of federal carbon tax, which is set to more than triple in the coming years. Trudeau is threatening Nova Scotia with a similar tax unless it does so itself.

The Houston government has made a compelling argument that Nova Scotia should be exempted, on the grounds that the province will by 2030 eliminate all coal-fired generation and reach a best in Canada 53% reduction in emissions since 2005. Surprisingly the province has been able to make this credible forecast in spite of the lack of progress on the Atlantic Loop

The three initiatives leading to that involve full delivery of the Muskrat Falls electricity, implementation of the just-awarded wind projects, and implementation of a second set of similar projects. None of these involve unproven technologies.

Provinces have been able to able to avoid the federal tax by having programs deemed to achieve the same reduction in Greenhouse gas emissions as the tax on coal, oil, natural gas, and gasoline.

The federal government has failed to do its part to support reduction of emissions and facilitate the elimination of coal by 2030. The province has nevertheless provided a credible plan for doing so. On what basis can Trudeau impose a carbon tax on Nova Scotians?


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Reference Material

Power Plays

Nova Scotia Power Inc. 2022-24 Financial Outlook (Redacted)

Nova Scotia Power Inc. 2021 Annual Report to UARB (Redacted)

Halifax Budget Committee 2022/23 Fiscal Framework

Environmental Goals and Climate Change Reduction Act

The Unintended Consequences of the Atlantic Loop

How Canada Intends to Achieve its 2030 Emissions Targets

Nova Scotia Power Integrated Resource Plan

Comments on NSPML Compliance Filing

Nova Scotia Utility and Review Board Decision

Maritime Link Compliance Filing

Comparison of Electricity Prices in Major North American Cities

NSPI 2009 Integrated Resource Plan Update Report

Summary of Existing Generation Plant

Comparison of Demand to Supply

Slides from recent NSPI Presentation

The Power Mess on Long Island

Primer on the Process of Hydraulic Fracturing

Nova Scotia Hydraulic Fracturing Review and Public Consultation

Contributions of Utilities Regulation to Electrical Systems Transformation: the Case of Nova Scotia

Nova Scotia Electricity System Review Report


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