Smart policy, not the Business Council of British Columbia’s (BCBC) plan of inaction, is how B.C. can drive down carbon pollution while maintaining the competitiveness of the province’s export industries. In BCBC’s critique of our latest report, A Clean Economy and Jobs Plan for British Columbia, BCBC argues there are three main reasons the province should not adopt new climate policy:
- It’s unlikely that North America will follow B.C.’s carbon policy leadership.
- The Clean Economy and Jobs Plan we outline in the report doesn’t provide enough detail on how export industries would be affected.
- If North America doesn’t follow B.C.’s lead on climate policy, then the province’s export industries will be less competitive.
We disagree with BCBC on all three points. The first two we addressed in our report, but we provide more detail below. The third point we did not address in the report, but it’s worthy of discussion. We’ve also prepared a point-by-point technical response available here, for those who want a deeper dive.
1. Why we expect North America will soon follow B.C.’s lead on climate policy
Other jurisdictions across North America are catching up to B.C.’s leadership on climate, and there’s good reason to believe this will continue in the future.
In Canada, Alberta recently released its plan to phase out coal over 15 years and put in a $30-per-tonne carbon price (it also put a cap on emissions from the oilsands sector). Ontario has joined Quebec and California with cap-and-trade, and in October Quebec announced its electric vehicle strategy. Saskatchewan, Manitoba and Nova Scotia have all announced new policy actions as well. Meanwhile, Prime Minister Justin Trudeau has committed to negotiate a national climate strategy with the provinces before the end of the first quarter in 2016.
Smart policy, not the Business Council of British Columbia’s (BCBC) plan of inaction, is how B.C. can drive down carbon pollution while maintaining the competitiveness of the province’s export industries.
The United States has three major regulations in effect or being developed to drive down carbon pollution. The Clean Power Plan to reduce emissions in the electricity sector, fuel economy standards to reduce transportation emissions, and a new set of rules to reduce emissions in the petroleum and natural gas industries. Collectively these policies cover 60 per cent of U.S. emissions and these standards will likely become more stringent over time. This is in addition to a range of state-level policies. While these are not carbon taxes, they imply carbon prices.
President Obama has also made it clear that clean energy and climate change will provide the “basis for even closer coordination between [Canada and the United States] going forward.”
The rest of Canada and North America — not to mention other countries around the world — are quickly catching up to B.C. and our assumption that North America is a fast follower is reasonable, and consistent with the B.C. government’s efforts to encourage action in other jurisdictions.
2. Export industries do well in this world
Our analysis includes key export industries like forestry, mining, natural gas, agriculture and manufacturing. A low-carbon world is still going to need metal from B.C.’s mines, forest products and even some of B.C.’s natural gas. Maintaining the competitiveness of these industries is a critical part of maintaining B.C.’s prosperity — which we make clear in the report. As B.C. drives down carbon pollution, Mining, forestry, natural gas, agriculture and manufacturing all employ more people in our analysis, adding 54,000 new jobs over the next decade and increasing B.C.’s GDP.
B.C.’s resource sector remains competitive in a low-carbon world in part because of access to B.C.’s abundant and affordable clean electricity resources.
The analysis presented in the companion technical report published with our Clean Economy and Jobs Plan also clearly compares job growth relative to a business-as-usual scenario. If B.C. implements carbon policy, mining, agriculture and agriculture will have grown more quickly by 2050, and forestry and natural gas less quickly, relative to a business-as-usual case.
3. B.C.’s export industries can compete, even if North America is slow to follow
As BCBC points out, we didn’t model the impact to B.C’s export industries if North America lags behind B.C. in implementing climate policy. However, their conclusion that B.C. business would suffer under this scenario is false.
There’s little evidence that B.C.’s competitiveness is at risk. Global, national and provincial studies have all concluded the same thing — carbon pricing has a minimal impact on competitiveness outside of a small segment of the economy known as emissions-intensive, trade exposed sectors. In B.C. this likely means cement, petroleum refining and maybe LNG if it’s developed. Sensitive industries account for two per cent of B.C.’s GDP, according to the Ecofiscal Commission.
It’s fair game to help those industries remain competitive if others don’t act, and B.C. knows how to do that—- by using targeted, transparent and temporary measures. For instance, last year British Columbia announced $22 million over three years for the province’s cement industry to help it transition to cleaner-burning fuels.
British Columbia can also look to other jurisdictions. Australia’s short-lived carbon pricing scheme included transition support for its emissions-intensive, trade-exposed sectors, as do Quebec and California’s cap-and-trade systems. Tax breaks, infrastructure investments and border adjustments are other ways jurisdictions can mitigate this issue.
British Columbia should be cautious about which industries and which tools to use, since not all industries that claim to be adversely affected are, but there are many options and precedents to draw on.
Global climate action is accelerating and British Columbia would do well to stay at the forefront of this change. It’s true that leadership brings its challenges, but B.C. can help those industries most sensitive to climate policy adapt. BCBC’s recommendation to wait for other jurisdictions is not constructive and is inconsistent with the B.C. government’s determination to continue to lead on climate change. BCBC’s expertise would be best focused on how to support the Premier’s goals of driving down carbon pollution and growing the economy, rather than lowering the bar.