BC's acclaimed carbon tax makes final climb, but critics warn of trouble ahead
The benefits of BC's carbon tax start bearing fruit, but as the province plans to develop and export liquid natural gas to Asia, will it be able to maintain its status as a leader in combatting climate change?
On Canada Day, BC's carbon tax made its final scheduled climb, increasing from $25 to $30 per metric ton of carbon dioxide.
“[T]he best climate policy in the world got even better,” wrote environmental economist Yoram Bauman and law professor Shi-Ling Hsu from Florida State University in an op ed to the New York Times.
Bauman and Hsu praise the BC carbon tax, the first of its kind in North America, as a policy that could easily be implemented in the United States. They argue that it makes more sense to tax things we don’t want (like pollution and carbon emissions) than to tax things we do want (such as income and investment).
“Why tax good things when you can tax bad things, like emissions?” they wrote, adding that the idea for such a tax shift has support from economists from all kinds of political leanings.
“A carbon tax makes sense whether you are a Republican or a Democrat, a climate change skeptic or a believer, a conservative or a conservationist (or both),” they wrote. “We can move past the partisan fireworks over global warming by turning British Columbia’s carbon tax into a made-in-America solution.”
The BC carbon tax, introduced by former premier Gordon Campbell, started at $10 per tonnage and has gone up $5 every year. This is the final year that it is scheduled to rise.
To phase in the tax, Campbell coupled it with cuts to personal and corporate income taxes.
Finance Minister Kevin Falcon announced in February that the government would be undertaking a comprehensive review of the carbon tax in order to analyze how the tax impacts the economic comptetitiveness of BC's businesses.
The carbon tax was implemented with the hope that other jurisdictions in North America would soon follow suit, but that has yet to be seen.
Benefits of carbon tax bearing fruit
The Pembina Institute interviewed 39 people in BC from businesses, non-government organizations and academia about the carbon tax and found that a majority (64 per cent) thought that the carbon tax has had positive impacts for the province, while a small minority (18 per cent) believed that the policy has had negative consequences.
Environmental groups, such as the David Suzuki Foundation, praised the carbon tax when it was implemented in 2008. But others, such as a senior economist with the Canadian Centre for Policy Alternatives, Marc Lee, argue that to really meet the province’s ambitious goals of reducing emissions by one third, the carbon tax needs to hit $200 a tonne by 2020.
A report by Sustainable Prosperity, a research group based out of the University of Ottawa, outlined key benefits of the BC carbon tax already being seen so far.
- Petroleum fuel use in BC has dropped by 15.1 per cent (and 16.4 per cent when compared with the rest of Canada).
- BC’s GDP growth has outpaced the rest of Canada’s (by a small amount) since the carbon tax was implemented.
- BC’s per capita GHG emissions declined by 9.9 per cent from 2008 to 2010, outpacing the rest of Canada by more than 5 per cent.
Professor Stewart Elgie, lead author of the report wrote:
“By 'decoupling’ its economic growth from fuel consumption, the province is making itself less vulnerable to the volatility of fossil fuel prices, and it has created a fiscal advantage for itslef through reduced personal and corpoate income cuts.”
But BC plans to build three liquefied natural gas (LNG) plants in BC by 2020 in order to export the fuel to Asia.
While the carbon tax has allowed BC to claim the title of climate change leader in North America, a recent announcement by premier Christy Clark to redefine natural gas as "clean energy" is calling that claim into question.
Climate change leader bending rules on natural gas
In order to meet legal requirements of the Clean Energy Act that asks for 93 per cent clean energy, while still being able to develop BC's shale gas reserves, Clark has redefined natural gas as clean.
University of British Columbia political science professor Kathryn Harrison and executive director of the Pacific Institute for Climate Solutions, Tom Pederson, wrote an op-ed to the Vancouver Sun:
"Combustion of natural gas, with the resulting green-house gas emissions, directly conflicts with BC's commitment, adopted in 2008, to zero-emissions electricity...
"LNG production not only threatens BC's commitment to clean energy, but also the province's legally binding commitment to reduce its greenhouse gas emissions. The additional emissions from powering just one LNG plant with natural gas and from upstream production of natural gas through unconventional fracking are projected to increase BC's emissions by 22 per cent, or 15 million tonnes of CO2.
"BC's natural gas strategy thus will make it impossible for BC to meet its already-challenging target to reduce emissions by 33 per cent by 2020."
Clark claims, without supporting evidence, that exporting liquid natural gas to Asia will enable China to reduce it's reliance on coal, and thereby its emissions.
Harrison and Pederson, however, argue that exports of natural gas could just increase their energy use, a theory supported by academic energy analysts, including Mark Jaccard.
Jaccard, a professor of resource and environmental management at Simon Fraser University and an adviser during the creation of the Clean Energy Act told the Globe and Mail in an email that he is skeptical about Clark's claims.
"I work with the leading global energy modelers, and none of them find this result," he wrote.
"She has no evidence to the contrary, and yet makes up this story that natural gas exports are somehow miraculously clean.”