Amid fresh warnings from Ottawa that millions of dollars in federal funding are at stake, the P.E.I. government says its climate plan "is in the best interests of Islanders," and as such should be accepted by the federal government.

Ottawa has given the provinces a deadline of Sept. 1 to submit their plans to reduce carbon emissions and deal with climate change, saying it will implement its own carbon tax in jurisdictions whose plans don't meet federal guidelines.

On Wednesday federal Environment Minister Catherine McKenna said provinces that don't meet Ottawa's standard will also find themselves cut off from $2 billion in federal funding through the Low Carbon Economy Fund.

Government expects the feds to accept the plan that is in the best interests of Islanders and that will meet our targets. — Province of P.E.I.

In order to qualify for funding, McKenna said provinces "need to commit to our climate plan. It includes putting, recognizing there's a cost to pollution."

"We need to be serious about climate change," McKenna said. "We're committed to supporting those provinces that are committed to that."

P.E.I.'s share of the Low Carbon Economy Fund amounts to $34 million. The province has already announced plans to spend $24 million of that to support efficiency upgrades and other programs designed to reduce carbon emissions.

P.E.I.’s Environment Minister Richard Brown has said his government is 'fighting for Islanders' against a carbon tax which could be imposed by Ottawa. (Randy McAndrew/CBC News)

Even though Ottawa has said provinces need to put a price on carbon — either by implementing a carbon tax or instituting a cap-and-trade system — P.E.I.'s Environment Minister Richard Brown has said the province can meet its emission targets without a carbon tax.

The province, also, is not proposing to implement a cap-and-trade system, which would put soft emissions limits on industrial emitters, and allow them to buy and sell credits if they go over or under those limits.

'In the best interests of Islanders'

In a written statement Thursday, the province told CBC News its submission to Ottawa "will reflect our climate change and energy plans, which include a price mechanism on carbon through incentives. Government expects the feds to accept the plan that is in the best interests of Islanders and that will meet our targets — which the plan government will be submitting will do."

The province has pledged to reduce emissions 30 per cent below 2005 levels by the year 2030.

But some experts have told CBC they expect Ottawa to determine that P.E.I.'s plan does not meet federal guidelines because it doesn't put a price on carbon.

Ottawa has said it will review submissions from the provinces over the fall, with the federal carbon tax to come into effect Jan. 1, 2019, in any jurisdictions that don't meet Ottawa's guidelines.

Saskatchewan has already launched a legal challenge over the issue, which is now supported by Ontario.