Cap and Trade for Nova Scotia Still Fuzzy for Small Business

cap-and-trade

The Nova Scotia government’s decision to go it alone with cap-and-trade to put a price on carbon raises more questions than answers.

This spring, government released a discussion paper, looking for feedback. They gave less than a month for responses and you needed a degree in environmental science to make any sense of what was being asked.

At an information session, executive director Jason Hollett of the climate change unit tried valiantly to outline a coherent picture, but he was working within an unreasonably tight timeline and without all the tools. In spite of a commendable effort, many left the session scratching their heads. Under questioning, somewhat ominously, he referred to the scheme as “a big regulatory beast.”

Without much heavy industry, Nova Scotia has few large greenhouse gas (GHG) emitters. Our coal-burning generating stations are pumping out the lion’s share (44 per cent). The transportation industry creates 27 per cent, followed by commercial and residential heat (combined 13 per cent) and the oil and gas industry (five per cent). The remainder comes from waste, agriculture and other industry.

For years, Nova Scotians have been paying through the nose to achieve GHG reductions through transition to renewable electricity generation and efficiency. We can pat ourselves on the back. After coughing up the highest power rates in the country over the last 10 years, our renewable portfolio has grown from seven to 27 per cent, exceeding our reduction targets.

Apparently unsatisfied with this progress, the Trudeau government, riding its mandate to legislate away climatic catastrophe, told Nova Scotia to put a price on carbon by 2018 or we’ll do it for you. The McNeil government initially balked, then came up with what it felt was the best option, a go-it-alone cap-and trade-system.

Using cap and trade, the premier successfully avoided the “carbon tax” narrative, opting instead for what appears to be a more saleable version.

The proposed Nova Scotia cap-and-trade model is fairly simple, but its administration is expected to be complex and therefore, presumably, costly.

Government will cap the amount of GHGs emitted into the atmosphere, hand out free credits for that tonnage to this handful of larger polluters and they can trade among themselves. When someone needs more, they can buy in this tiny market of emitters. How that will affect price is unclear.

A central tenet of carbon pricing is revenue neutrality. But with this plan, at least for now, there is no clarity in respect to dollars changing hands or how it will affect the price of electricity or fuel. Other questions: Will the incentive to be greener simply be higher energy and transportation costs? What would be the offset?

Moving ahead without the required evidence in respect to cost and competitiveness will frustrate business owners. In spite of a stated intention by government to measure and cost all regulation prior to application, none of these calculations are yet available.

While public servants are trying to align regulations between provinces to break down trade barriers, Nova Scotia’s approach (in spite of the premier’s openness to having the other Atlantic provinces jump on board) could result in two, three or four carbon pricing schemes in the region.

cap and trade chart

CFIB members support environmental initiatives. Seventy-nine per cent believe it is possible to grow the economy and protect the environment at the same time. But 80 per cent say government must consider the cost to small business before implementing a mechanism to price carbon. That means measuring and communicating real economic costs and environmental benefits and establishing a reasonable window for consultation and implementation.

In light of the work by this government to improve the regulatory environment, introduction of a “regulatory beast” feels counter-intuitive and environmental and economic impacts are still fuzzy. For something of this size and importance to be a cost of doing business in Nova Scotia, we need clarity.

This originally appeared in the Chronicle Herald, April 26, 2017

Is Halifax “the new Seattle”? We have some work to do…

nova centreIt’s been 25 years since someone at Melody Maker declared Halifax “the new Seattle.” The reference was to the early 90’s burgeoning alternative music scene and what seemed to be a genuine surge in hip music, culture and attitude in the city.

Halifax is still a pretty cool place to live, all things considered, but it isn’t Seattle. However, there are signs we may be taking steps toward acting a bit more like the home of the Seahawks.

This week, Halifax Regional Council voted to do something to help businesses being pummelled because they are located next to large scale development projects. CFIB has been working for a couple of years to assist the city with the development of plans to mitigate the severe damage being done to businesses suffering in the shadow of construction disruption.

The construction site management technical guidelines approved this week are designed to help folks contending with future projects. The speed of the action taken indicates the mayor and councillors understand the severity of the problem.

A lack of appropriate guidelines, oversight and management capacity on the part of the city has wreaked predictable economic havoc.

What is puzzling is the city’s reluctance to publicly accept responsibility for any of the damage. CFIB acknowledges and supports the new guidelines as a positive step forward. Still, as Economy Shoe Shop owner Victor Syperek noted to the CBC this week, for many of the businesses adjacent the Nova Centre, it’s closing the barn door.

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Recently, some of these businesses have launched legal action to seek redress. In response, the city immediately distanced itself, saying the suit, which is rooted in a statutory claim of “injurious affection,” fell outside the interpretation of the law. Certainly the city is well within its rights to defend itself against a lawsuit, but there seem to be contradictory messages here.

On one hand, the rapid development of a construction management guideline recognizes the city did a lousy job protecting small businesses against a development it approved. On the other, the city claims it legally bears no responsibility for the impact. Hmmm.

So, back to Seattle. In contrast to the Halifax approach, in advance of recent major work along an important avenue populated by many small and micro-business, Seattle set up the 23rd Avenue Stabilization Fund with the intent of providing support to businesses which would inevitably be affected by major road reconstruction.

Businesses were invited to apply under clear criteria for support, ranging from deferrals of taxes, licensing and utility payments, to direct financial assistance. Direct and individualized support was provided by the city to assist business owners in gathering the necessary documentation. Communication from the city was clear, precise and issued well in advance of any activity. Consideration was given to access and promotion of business in the region.

Seattle also did a similar and wider scale project in the early 2000s called the Rainer Valley Development Fund during their light rail transit line construction, so it’s not the first time they’ve thought outside of the box and looked beyond state laws to find ways to compensate small business.

With this in mind, Halifax now has to look at not just construction regulation, but the complete picture; a more empathetic approach with creative solutions to let small business know it’s actually valued in this city.

It may not be Nirvana, but it’s certainly better than what we’ve seen.

This post originally published in the Chronicle Herald