Maritime Iron retreats after suggesting carbon-tax break for Belledune site

The company proposing a new iron processing plant in northern New Brunswick now says it's not looking for a break on federal carbon taxes through credits for potential emission reductions outside Canada.

Maritime Iron wants to build a $1.5 billion plant in Belledune that it says will increase emissions in New Brunswick but could lower them elsewhere.

The company will soon file its application to the provincial government for an environmental impact assessment.

In an interview last month, Maritime Iron vice-president Elena Mantagaris said the company was aware of the "implications" of the federal carbon levy on large industrial emitters, but she argued the Belledune plant would also lower emissions globally.

Iron ore from Quebec and Labrador will travel a much shorter distance to Belledune than it does now to processors in China, reducing emission from ocean freighters hauling the metal, she said.

Asked if those global reductions could help reduce the company's carbon-tax bill, Mantagaris called it "a discussion we've been exploring."

But in a followup email, Mantagaris now says she had something "completely different in mind."

"I was thinking of the intersection between the national and global efforts to reduce emissions, which is evolving," she said, adding that "the full value proposition of our project" looks at the impact overseas.

"This may include, for example, the contribution our products may make to third parties' ability to lower their own emissions or could someday include an international credit system."

Mantagaris didn't respond to a request for a followup interview to explain how that might work.

Credit-trading rules

There are no agreed-upon rules for the transfer of emissions-reductions credits between countries.

In fact, talks this week at COP 24 in Madrid, the latest global climate change conference, will focus on how countries that signed the 2015 Paris agreement may someday count reductions outside their borders toward emissions-reductions targets.

The Paris deal committed signatories to their own legally binding targets but only within their own borders. It also leaves the door open to future talks on how to trade reduction credits internationally.

Jason Dion of Canada's Ecofiscal Commission, a pro-carbon-price think tank, says that's not likely to be easily sorted out in Madrid.

"All of this is still being defined at the international level," he said. "It's likely to remain unresolved for some time to come because it's really complex and tricky."

Maritime Iron says putting its plant in Belledune will reduce global emissions because iron ore from Quebec and Labrador is now shipped mainly to China for processing.

Sending it to Belledune instead would reduce emissions from ocean-going freighters by 98 per cent, Mantagaris said last month.

The finished product, called pig iron, would be sold primarily in U.S. markets, displacing pig iron from suppliers in places such asRussia and Ukraine and cutting those shipping emissions by 60 per cent, she added.

Last month, Premier Blaine Higgs said that federal cabinet minister Dominic LeBlanc told him last year that Ottawa could treat the project "as a global initiative and, as such, the environmental impact is reduced globally," despite higher emissions provincially.

But Dion said it could take years before countries agree on rules governing how that would affect national reduction targets.

Greener technology

Another way for Maritime Iron to avoid a steep federal carbon price is with its processing technology, which Mantagaris said produces emissions 40 per cent below conventional iron processing.

The federal levy on industrial emissions is based on whether a plant emits more than a standard set by measuring the average emissions of all plants in the same sector.

So if Maritime Iron's emissions are lower, it could benefit, Dion said.

The New Brunswick government has proposed its own industrial levy to Ottawa for approval under the national climate plan. If the provincial system is accepted, emitters would pay a levy on a smaller share of their emissions.

Maritime Iron says it will create 1,300 direct jobs during construction and 200 permanent jobs during the plant's operations.

Community leaders in the Belledune area have cited the plant as an urgent project in the wake of the announcement that the Glencore lead smelter is closing, putting 420 people out of work.