May 2021
Cap and trade
In 2017, Nova Scotia amended the Environment Act [PDF] to allow the provincial government to create a cap-and-trade program, followed by the implementation of the Cap-and-Trade Program Regulations in 2018. In January 2019, the cap-and-trade program came into effect.
Nova Scotia’s cap-and-trade program sets annual limits on the total amount of GHG emissions allowed in the province for the years 2019–2022. It covers about 80% of provincial GHG emissions. Every year, the province creates a set number of emission allowances that can be put in circulation equal to that year’s cap. The following emission allowance caps are in place:
- 13,683,000 in 2019
- 12,725,000 in 2020
- 12,258,000 in 2021
- 12,148,000 in 2022
While caps are set annually, the province allows for a four-year compliance period (2019–2022) to provide year-to-year flexibility for mandatory participants.
The largest number of emission allowances that a participant can hold at any one time (the holding limit) is 500,000. If two or more mandatory participants in the program are related — for example, if one is a subsidiary of another — they are considered a single mandatory participant for the purpose of the holding limit. In such circumstances, the related participants must share the 500,000 limit and disclose to the provincial government how the limit will be divided among the subsidiaries. Certain exemptions from the holding limit are available.
The province distributes most of the emission allowances free of charge to mandatory participants. Some allowances are sold through auction and some are reserved for sale through a government-held reserve. Mandatory participants can also buy emission allowances on the secondary market from other participants.
The following thresholds determine mandatory participation:
- Facilities generating 50,000 tonnes or more of GHG emissions annually from sources that are covered by the Quantification, Reporting and Verification Regulations.
- Petroleum product suppliers that first place 200 litres of fuel or more per year on the Nova Scotia market for consumption in the province. Petroleum products include automotive gasoline, diesels, light fuel oils, heavy fuel oils and propane.
- Natural gas distributors that deliver natural gas for consumption in Nova Scotia that, when combusted, produces 10,000 tonnes or more of GHG emissions annually.
- Electricity importers that import electricity into Nova Scotia for consumption in the province and whose GHG emission from the generation of the electricity imported is greater than 10,000 tonnes annually.
No voluntary participation is currently allowed in the cap-and-trade program. Companies that fall below the aforementioned thresholds are not required to quantify, report and verify their GHG emissions. Likewise, they are not required or eligible to acquire emission allowances.
While mandatory participants can trade emission allowances with one another, only emission allowances created by the province are recognized under the Nova Scotia cap-and-trade program. Mandatory participants cannot trade their emission allowances with participants in other jurisdictions.
In June and December 2020, Nova Scotia held its first auctions under the new cap-and-trade system, selling all allowances on offer. In 2021, two auctions are scheduled to occur in June and November.
Offsets
Carbon offset credits are issued for projects that either reduce GHG emissions or sequester GHG emissions over the long term from GHG sources not covered by the cap. Nova Scotia’s cap-and-trade legislation includes the ability to develop an offset system. However, regulations and protocols related to offset credits and offset projects are not yet available.
Sustainable Development Goals Act
In November 2019, Nova Scotia introduced the Sustainable Development Goals Act, which replaced the Environmental Goals and Sustainability Prosperity Act. The Act set new targets to fight climate change, including setting greenhouse gas targets:
- by 2020, at least 10% below the levels that were emitted in 1990
- by 2030, at least 53% below the levels that were emitted in 2005; and
- by 2050, at net zero, by balancing greenhouse gas emissions with greenhouse gas removals and other offsetting measures.
The Act also mandates the creation of a strategic plan called the “Climate Change Plan for Clean Growth” that will address:
- achieving the aforementioned greenhouse gas emission targets
- adapting to the impacts of climate change and building a climate resilient province
- accelerating the integration of sustainable and innovative technologies and approaches; and
- clean inclusive growth.
Petroleum Products Pricing Regulation
In Nova Scotia, the price of automotive gasoline and diesel is regulated under the Petroleum Products Pricing Regulations. For these fuels, the province allows the Utility and Review Board to include the compliance cost of the cap-and-trade program when determining the wholesale selling price for automotive gasoline and diesel.
For other fuels that are not price regulated, the way in which the price of carbon is included is determined by the market.
Coal plants
On May 26, 2014, Nova Scotia and the federal government signed the Canada-Nova Scotia equivalency agreement for the period 2015–2019, thus allowing Nova Scotia to be exempt from the federal requirement to phase out coal by 2030.
The province and the federal government have reached a renewed equivalency agreement for the Reduction of Carbon Dioxide Emissions from Coal-fired Generation of Electricity Regulations (the Agreement). The Agreement is in effect from January 1, 2020, to December 31, 2024. Like its predecessor, the Agreement allows the province to keep its coal-fired electricity plants open beyond the 2030 federal deadline. In exchange, Nova Scotia will be required to achieve deeper emission reduction targets in order to meet the equivalent of closing all coal plants by 2030.
In April 2020, the last remaining coal mine in Nova Scotia closed.
Renewable power
In 2015, the provincial government released Our Electricity Future – Nova Scotia’s Electricity Plan 2015-2040 [PDF] to guide the province away from carbon-intense electricity generation and towards greater use of renewable energy sources.
Additionally, Nova Scotia enacted the Renewable Electricity Regulations (the Regulations). As per the Regulations, each year beginning with the calendar year 2020, each load-serving entity will have to supply its customers with renewable electricity in an amount equal to or greater than 40% of the total annual amount of electricity supplied to its customers.
Green Choice Program
Nova Scotia is in the process of establishing the Green Choice Program, to be implemented through regulations that are currently being developed. The program will offer a new, simplified process for large-scale energy customers to procure 100% of their electricity from local renewable energy sources.
In January 2021, the Government of Nova Scotia announced that it had appointed CustomerFirst Renewables as the independent procurement administrator to enrol interested buyers, conduct requests for proposals and issue power purchase agreements for renewable electricity generation for large energy customers. It is anticipated that the federal government, which has committed to acquiring all of its electricity from renewable sources by 2022, will be a customer under the program.