The Vancouver Observer covers our latest report, How to Adopt a Winning Carbon Price. Here’s the original article by Derek Leahy.
Despite Canada’s international reputation as a laggard on climate policy, B.C.’s carbon tax is still seen throughout the world as a shining example of how to successfully price carbon with minimal impact on the economy.
According to a new report released today, the policymakers behind British Columbia’s carbon tax wear their creation as a badge of pride.
“All architects of British Columbia’s carbon tax we spoke to were incredibly proud of what they had done,” said Merran Smith, director of Clean Energy Canada, the green energy think tank that produced the report.
Clean Energy Canada interviewed the leading political figures responsible for the creation and implementation of B.C.’s tax on carbon pollution, adopted in 2008. Former premier Gordon Campbell, and former finance minister Carole Taylor, the main drivers of the carbon tax, are among the dozen high-profile interviewees.
“British Columbia has been a leader with our carbon tax, and it’s always been my hope that other jurisdictions will step up and follow our example — or even beat it,” B.C. premier Christy Clark said in the report.
In many ways the report is a how-to guide for other provinces currently considering adopting or improving their own prices on carbon pollution like Alberta and Ontario. The report gives political leaders practical advice, such as not raising the carbon tax when gas prices are soaring, and to be ready for criticism from businesses.
Even in the name of tackling climate change, raising taxes often doesn’t sit well with voters. Last week, the Conservative Party sent out an email with the subject line “A new carbon tax?” The email criticized Liberal leader Justin Trudeau for proposing that provinces make their own decisions on carbon pricing.
“It’s been a positive overall for the economy, because we have such good corporate tax rates here — that’s a positive for business. In the ’90s, we had the highest taxes in the country and businesses left. Now we have the lowest tax rates and that’s good for B.C.’s economy,” Carole Taylor stated.
The report thoroughly debunks the idea that a carbon tax is a jobs killer and a growing economy’s worst nightmare.
“There is no evidence of this at all in B.C.,” Smith told The Vancouver Observer.
B.C.’s economic performance is well above the Canadian average, and has some of the lowest corporate tax rates in Canada. At the same time, the province still has managed to reduce its greenhouse gas emissions while other Canadian provinces like Alberta and Saskatchewan have seen their emissions soar. B.C. successfully achieved its 2012 greenhouse gas (GHG) emissions reduction target of a six per cent decrease based on 2007 levels.
The tax is also revenue neutral by law. Every dollar of revenue generated by the tax is given back to the people of B.C. through tax cuts and credits. The tax generates one billion dollar of cuts annually. Last year the provincial government’s total revenue was $44 billion.
B.C.’s Finance Minister actually has to take a 15% pay cut if the carbon tax fails to be completely revenue neutral.
“I feel great about it. If I was asked for three things that I feel most proud of, I would pick this as one of them,” one of the interviewees said off the record. Some interviewees provided comments anonymously.
Gordon Campbell, premier when the carbon tax was implemented, was behind the decision to make the carbon tax revenue neutral. The former Liberal premier is given much of the credit in the report for providing the necessary leadership to making carbon pricing in B.C. a reality:
“All those [other] conditions helped give the province licence to act. But the story is really very simple: British Columbia adopted a cutting-edge climate policy because of one politician’s personal convictions,” the report concludes.
Under Campbell’s leadership, the carbon tax was implemented quite quickly. The tax was announced in February of 2008 and just six months later the provincial government was already collecting revenue. Much of this has to do the carbon tax’s simple design — if you burn fossil fuels (oil, natural gas, etc) you pay the tax.
The tax did not mean extra paperwork for British Columbians. Instead, tax appears on their heating bills or in gasoline purchases. Since the carbon tax began at such a low price ($10 per tonne of carbon) and grew slowly from there the tax had a modest impact at best on consumers’ bills. In 2008, $10 carbon tax roughly worked out to a two-cent increase on a litre of gas in B.C.
“Once you get a price on pollution people try to avoid it. Per capita fuel consumption in B.C. has been going down since the adoption of the carbon tax,” Smith of Clean Energy Canada said.
B.C.’s carbon tax hit its mandated maximum price of $30 per tonne in 2012 and remains at that price today. Organizations like Clean Energy Canada argue the tax needs to continue to grow incrementally to provide incentives for the public, industry and businesses to further reduce their carbon footprints. Many believe the time has also come to expand the carbon tax to non-combustion sources of greenhouse gas emissions.
“The carbon tax should expand to include fugitive methane emissions from B.C.’s natural gas industry. We couldn’t measure this in 2008 but now we can,” Smith told The Vancouver Observer.
Natural gas operations, especially those using the controversial fracking or hydraulic fracturing method, leak methane – an extremely potent greenhouse gas – into the air. The world’s foremost scientific body on climate issues, the Intergovernmental Panel on Climate Change, finds methane has 84 times the global warming potential of carbon dioxide over a twenty-year period.
It is unclear if Clark’s pro-LNG government has the political will to include B.C.’s booming natural gas industry in the current carbon tax.
The best piece of advice the report has for provinces, states, and countries considering their own carbon pricing scheme can be found on one of the last pages and it is as simple as the carbon tax itself:
“Do it! It’s the right thing to do,” the anonymous policymaker said in the report. “It should be the future of taxation.”