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Carbon and Greenhouse Gas Legislation in Prince Edward Island

May 2021

Carbon Tax in Prince Edward Island 

Climate Change Action Plan 2018-2023

The Government of Prince Edward Island developed a five-year Climate Change Action Plan [PDF] . In line with other jurisdictions in Canada, the province initially committed to a reduction in greenhouse gas (GHG) emissions of 30% below 2005 levels by 2030. Several months after the adoption of this target, however, the provincial government adjusted its greenhouse gas (GHG) emission target from 30% to 40% below 2005 levels by 2030.

  • The plan focuses on five action areas:
  • adapting to climate change
  • reducing GHG emissions
  • carbon sequestration
  • education and capacity building, and
  • research and knowledge building.

Through the plan, the provincial government has committed to, amongst other things:

  • adopt the federal backstop for industrial emitters (discussed below)
  • grant exemptions to the agriculture and fisheries sectors
  • work to achieve the goals of the Pan-Canadian Framework and, through relative pricing on cleaner energy, mitigation efforts and clean growth
  • provide P.E.I. residents, businesses, industries, and municipalities with more opportunities to reduce their energy consumption and switch to lower-carbon energy systems and technologies by offering new and expanded programs and services through efficiency PEI
  • design and install a province-wide electric vehicle charging network
  • implement a greening government program, including the development of a GHG emissions inventory for government, energy efficiency upgrades to provincial buildings, improved fuel efficiency of the government’s vehicle fleet and a commitment to green procurement
  • increase support for existing funding programs, such as the Alternative Land Use Services program and the Forest Enhancement Program, to expand carbon sequestration opportunities

As of March 2019, Prince Edward Island’s GHG emissions were 10% below 2005 levels, which is 25% of the way towards the newly adopted target.

Federal carbon pollution pricing system

Under the Greenhouse Gas Pollution Pricing Act (GGPPA), the federal carbon pollution pricing system applies in-part to Prince Edward Island. The following features of the federal system are applicable in the province:

  • For larger industrial facilities, an output-based pricing system (OBPS) for emissions-intensive trade-exposed (EITE) industries applies. It covers facilities emitting 50,000 tonnes of carbon dioxide (CO2) equivalent or more annually.
  • Smaller EITE facilities that emit 10,000 tonnes or more of CO2 equivalent annually may voluntarily opt in to the system over time.

In addition to the federal OBPS, Prince Edward Island has also implemented a carbon levy on fuels under the Climate Leadership Act [PDF] (the Act) and the Climate Leadership Regulations [PDF]. Under the province’s carbon levy [PDF],a levy is applied to 26 fuel types at prescribed rates for each fuel type.

The Act allows individuals involved in farming and aquaculture to apply for a levy exemption permit to purchase fuel exempt from the carbon levy.

As a result of New Brunswick’s implementation of the carbon levy, the federal fuel charge under the GGPPA, which similarly implements a tax on various fuel types, does not apply in New Brunswick. 

Low Carbon Economy Fund

The federal government’s Low Carbon Economy Fund (the Fund) has a goal of reducing emissions and creating opportunities in Prince Edward Island. The fund has provided nearly $35 million to support projects that:

  • provide homeowners with incentives to increase energy efficiencies in their homes, as well as incentives for improving efficiency in low-income housing and businesses
  • help farmers reduce pollution and increase the efficiency of their operations; and
  • plant trees, which help keep the air clean and absorb carbon.

In addition, the federal government has allocated almost $28 million to investments in public transit and over $228 million for investments in green infrastructure in Prince Edward Island.

Net Zero Carbon Act

On December 3, 2020, the Net-zero Carbon Act [PDF] received Royal Assent. Among other things, the Act establishes the following targets for the purpose of reducing PEI greenhouse gas emissions:

  • by 2030 and for each subsequent calendar year, PEI greenhouse gas emissions will be less than 1.2 megatonnes of carbon dioxide equivalent per year; and
  • by 2040 and for each subsequent year, PEI greenhouse gas emissions will be at a level where carbon neutrality is achieved.

Beginning in 2021, the Act also requires PEI’s Minister of Environment, Water and Climate Change to table a report before the Legislative Assembly outlining climate change risks, as well as progress that has been made towards achieving the targets.

Regional GHG emissions goals

PEI is a party to the Conference of New England Governors and Eastern Canadian Premiers’ updated climate change action plan [PDF]. Under the action plan, the province has adopted the goal of reducing regional GHG emissions by 35 to 45% below 1990 levels by 2030.

Energy Rebate

Through its Energy Rebate program, the province has provided its residents with a 10% rebate to the first block of residential electricity (2,000 kWh per month), as well as on lower-emitting heat sources, including firewood, pellets, and propane.

Sustainable Transportation Action Plan

PEI has released a 27-point Sustainable Transportation Action Plan [PDF] (the Action Plan), which sets goals over a five-year time frame, including more electric vehicles, expanded public transit and cycling paths. The Action Plan does not set out costs or specific commitments, but provides a broad outline on how Islanders can reduce emissions from the transportation sector, which accounts for approximately 47% of PEI’s emissions.

Carbon Capture Tree Planting Program

In February 2019 the provincial government announced a Carbon Capture Tree Planting Program  designed to combat rising greenhouse gas levels. The program plants suitable native tree species on marginal and grass sites and covers all planting and seedling costs for participating land owners.

How does this policy compare with other regions in Canada?

View infographic