Nova Scotia manufacturers issue carbon pricing warning

Nova Scotia'slargest companies are weighing in against the federal government's carbon pricing plans for the first time.

The Nova Scotia division of the Canadian Manufacturers and Exporters Association (CME) saidcarbon pricing will add "significant costs" to doing business in theprovince.

"It's equivalent to paying twice," Nova Scotiavice president Mitch Raymond told CBC News.

A CME discussion paper released this week is the first comment by big business in Nova Scotia since Ottawa issued its ultimatum to provinces to adopt a carbon tax or cap-and-trade system by 2018 or have one imposed.

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Its focus is entirely on the potential impact of carbon pricing on electricity rates, which are already among the highest in Canada.

"With half the cost being incurred by businesses, this will definitely negatively impact competitiveness and an already fragile economy," the report states.

The association saidcarbon pricing is already embedded in rates.

They haverisen in part to pay for the adoption of more expensive sources of renewable energy to generate electricity. The requirement was imposed by the previous NDP government.

Raymond saidif a benchmark tax of $30 for every tonne of CO2 emissions is used, it would add $200 million to the cost of electricity each year or a 15 per cent increase in electricity rates.

"It just doesn't make sense to put another $200 millionon top of what we are doing. It's all about the goals. As Nova Scotians, we are set to almost double what the federal government is looking for for reduction," he said.

Premier 'grateful' for support

The CME represents some of Nova Scotia's largest private sector employers, such as Michelin Tire, Oxford Frozen Foods and underwearmanufacturer Stanfield's. Raymond saidexporters would be vulnerable to costs that are not borne by international competitors.

"The federal government needs to recognize Nova Scotia's unique approach of regulating greenhouse gas reductions and renewable energy increases, rather than hoping for consumer change based upon a price signal,"the discussion paper states.

The association is in lock step with arguments made by Nova Scotia Premier Stephen McNeil, who was unaware of the CME position paper Wednesday, but "grateful" for the support.

McNeil saidNova Scotia continues to negotiate with the federal government on a cap-and-trade system that recognizes the greenhouse gas reductions that have already taken place.

"There wil be no carbon tax unless it's imposed by the national government," McNeil said.

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Ottawa isn't budging

On Wednesday,the press secretary for federal Environment Minister Catherine McKenna did not respond directly to the Canadian Manufacturers and Exporters Association.

The minister's office issued a statement attributed to McKenna praising, "the great work Nova Scotia has done to tackle climate change by reducing emissions in its electricity sector."

But there was no move away from Ottawa's expectation that carbon pricing is going ahead.

"Nova Scotia now has the opportunity to design a carbon pricing approach that builds on that work," the statement said. "The province can also choose what to do with revenues from carbon pricing. Options include tax cuts to families and small business or even rebates."

'We are going to be left behind'

Environmentalist Mark Butler agrees any carbon price should reflect progress made in reducing CO2 emissions from electricity generation.

"But there's the rest of the economy where we haven't done so much where we need a tool like this," Butler toldCBC News.

Butler dismissesCME's claims carbon pricing will make the economy uncompetitive.

"You know what's going to make us uncompetitive is continued reliance on fossil fuels, continued reliance on coal. This is a way to make that transition. We are going to be left behind if we don't make that transition."