England's "expensive gas" saves money

All taxes on carbon fuels work as carbon taxes. When any tax raises the price of a carbon fuel, like gasoline, the marketplace will soon find ways to use less of it.

Recently, I read about how the British government raised gas taxes in the 1990s in a partial attempt to reduce carbon pollution. It got me wondering how other gas taxes compare to BC's official carbon tax. So I did the math, and the results surprised me.

As my chart above shows, gas taxes in Britain, Germany and France are equal to an unofficial carbon tax of $500 per tonne of CO2. None of their gas taxes are formally called carbon taxes, but they act as such.

Indeed, the British, Germans and French emit three times less CO2 per person from their transportation. That’s a gigantic difference in climate pollution levels.

Here in BC, we have provincial laws, national treaties and a rapidly deteriorating climate that all say we have to achieve a similar low level of CO2. As the chart shows, our effective carbon tax is $185 – three times smaller. And smallest of all these taxes on carbon fuels is our official BC Carbon Tax of just $25.

Why would the British, French and Germans impose such gas taxes on themselves? The reason, as my previous article pointed out, is that they enjoy a lot of benefits that emerge from their consistently higher gas prices. Compared to them:

• We spend twice as much on gasoline per person each year
• We buy three times more gasoline per person
• We pollute three times more CO2 per person
• We generate much less GDP per litre of gasoline
• We pay more when gas prices spike per person
• We are less prepared for peak oil impacts
• We are less prepared for low-carbon mobility
• We are less prepared for low-carbon prosperity
• We have more work remaining on climate solution

So, out of curiosity, I looked at a scenario in which we in BC choose to converge on British gas prices over a decade.

The cost of oil is roughly the same for our two nations. In fact, oil is slightly cheaper for Britain than Canada. Instead, their gas is 80 cents more per litre because they tax it 80 cents more per litre. And that 80 cents acts as an extra $330 in carbon taxes.

I think that bears repeating as it is crucial to our relative levels of success at achieving low-carbon prosperity and low-carbon mobility: the British, French and German economies are reacting to a carbon price that is $300 higher on gasoline.

In a scenario where we converge on their gas prices in a decade we would add another eight cents to our gas tax each year. That will increase our gas prices between three and six per cent each year. Actually, this is what the British intentionally did decades ago. Here is the story...