P.E.I.'s carbon pricing plan will lead to increases of nearly 12 cents a litre on gasoline and 14 cents a litre on fuel oil, according to calculations by the province's Climate Change Secretariat.

Those are the maximum increases that would come into effect in 2022, when the minimum price for carbon imposed by the federal government reaches $50 a tonne.

According to the calculations, by that point the province will generate $55 million a year from carbon pricing. That's more than the province currently takes in from alcohol and tobacco taxes combined.

The carbon pricing plan is expected to generate $11 million in annual revenues for the province when it kicks in in January 2018, pushing gas prices up 2.3 cents a litre and heating oil prices 2.7 cents a litre.

Premier Wade MacLauchlan told the Legislative Assembly on Tuesday that the province's carbon pricing plan would be "fiscally neutral," with the revenues split between lowering taxes for Islanders and investing in support for projects to increase energy efficiency.

'People can't afford it'

Opposition MLA Colin LaVie said during question period Tuesday that Islanders can't afford the plan.

"You brought in the HST, now you're putting carbon taxes on top of that," he said. "You reached in one pocket, now you're reaching in the second pocket, premier. People can't afford it."

The premier said energy retrofits would help shield low-income households from the impact of carbon pricing.

"People who have homes that may benefit from a retrofit, insulation, better windows, other ways in which their homes can be improved, perhaps even conversion away from fuel," MacLauchlan said.

He also said the push toward energy efficiency could create jobs, and keep more money in the local economy by diverting some of the $435 million that he said leaves the province to pay for fuel each year.

HST exemption on heating oil will remain

The province is also preparing to unveil its new energy strategy.

Today the premier announced that one recommendation from an earlier draft of the strategy will not be followed: he said the province will not remove the current HST exemption from home heating oil.

He also said the province's carbon pricing plan will not extend to the agriculture and fisheries industries.