Carbon tax or cap and trade? P.E.I. says it still hasn't decided

The P.E.I. government says it still hasn't decided whether to implement a carbon tax or develop a cap and trade system as the means to put a price on carbon emissions in the province.

A government spokesperson says P.E.I. is taking part in regional discussions on setting up a cap and trade system. Today the Nova Scotia government posted a discussion paper on the topic on its website.

• P.E.I. carbon tax will mean big spike in gas prices
• P.E.I. carbon pricing needs to be revenue neutral, says mayor

The federal government has given the provinces and territories until Jan. 1, 2018 to implement a price of $10 / tonne on carbon emissions, and given them the option of going with a carbon tax, putting the direct cost on consumers, or developing a cap and trade system, which would place direct limits on major carbon emitters.

Government waffling: Opposition

On Dec. 13, 2016, Premier Wade MacLauchlan told the House about the province's plans for carbon pricing, saying: "our approach will be fiscally neutral, with tax returns to Islanders, investments in efficiency support, especially for lower-income households, and improved clean infrastructure. To be introduced in January 2018, the carbon price will not extend to agriculture and fisheries."

A government spokesperson said the statement was not an announcement government had chosen to pursue a carbon tax, but the Opposition environment critic Brad Trivers said that's how he understood it.

"I think they're waffling, because they didn't really have a plan, and they hadn't really considered the ramifications of what that announcement meant," Trivers said.

"So now they're getting pushback from people like [Summerside] Mayor Bill Martin, and realizing they really didn't think this through."

When the premier made the announcement in December, news media, including CBC News, reported the province was moving ahead with a carbon tax.

Government documents say carbon tax best solution for P.E.I.

If the P.E.I. government does decide to pursue a cap and trade system, it will be against the advice of its own climate change secretariat.

Documents obtained by CBC News through a Freedom of Information request show the secretariat identified a carbon tax as "the most appropriate mechanism" for P.E.I. to implement a price on carbon.

"A carbon tax is likely the best approach for Prince Edward Island, as it can be implemented quickly using existing administrative system for taxing fuels," the documents state.

Those same documents include estimates of how much revenue government would bring in under a carbon tax: $55,240,264 per year when Ottawa's price on carbon reaches its peak of $50 / tonne.

Minister said cap and trade won't work

On Oct. 26, 2016, the province's Environment Minister Robert Mitchell told the province's standing committee on Communites, Land and Environment that a cap and trade system wouldn't work for the province.

"A cap-and-trade system would not cover a wide spectrum of the emissions and probably would not meet the criteria set down for us by the federal government," he told the committee. "You see our industry is a very small emitter at seven per cent. To make a big impact on reducing our footprint – we just don't have the ability to do that."

In an email statement, a provincial spokesperson told CBC News the province remains "committed to a made-in-P.E.I. approach to carbon pricing. Regardless of which mechanism is chosen, government is committed to assisting low-income Islanders, enhanced efficiency programs, and keeping the HST off of heating oil."