British Columbia has been receiving a lot of attention lately for its carbon tax, and so it should. But the current B.C. government has undermined the usefulness of the tax by freezing it at its 2012 level.
That carbon taxes reduce greenhouse-gas emissions and are inexpensive to administer is well established. Carbon taxes also raise revenues that allow for the reduction of other taxes on things we value, such as income. Revenues can also be used for needed public goods, such as enhanced transit, bike and pedestrian infrastructure.
Another alternative for revenues is to provide citizens with a direct financial dividend. Choices need to be made, but these are choices of opportunity.
A rigorous University of Ottawa study has shown that B.C.’s carbon tax has significantly reduced B.C.’s fuel use relative to other provinces. At the same time, the provincial economy outperformed the national average.
B.C.’s tax is repeatedly held up nationally and internationally as a model of successful climate action. For example, the David Suzuki Foundation and the World Bank have both recently praised our tax.
B.C., of course, is not alone. Soon the great majority of the Canadian economy will be subject to carbon pricing: Quebec, Ontario and Alberta have all implemented or committed to some form of carbon pricing, as have many international jurisdictions. The importance of provincial action is underlined by the Liberal Party of Canada’s commitment to provincial consultation and the lack of specificity in its own climate-policy platform.
But a carbon tax is a tool. It is not an end in itself. A carbon tax must be tied to the specific objectives of helping to reduce greenhouse-gas emissions and consequent damages.
B.C.’s method of linking has been to establish emission targets for 2020 and 2050. The tax and other climate policies are in the service of moving toward these targets. The reductions in harmful emissions are important in themselves. They are also important in continuing to demonstrate the efficacy of a carbon tax to other jurisdictions.
The fly in the ointment is that the current B.C. government has chosen to freeze the carbon tax rate until at least 2018 at its low 2012 level. By doing so, the single most effective instrument for addressing emissions is removed as a subject of potential middle-term policy recommendations from the Climate Leadership Plan discussion paper released this summer.
While the current B.C. administration claims and receives credit for pricing carbon, it has undermined the usefulness of this pricing. A stationary carbon tax breaks the dynamic link of ongoing emission reductions aimed at moving society toward a fundamentally carbon-reduced world. The tax needs to be raised smoothly and steadily in a well-planned and communicated way so that businesses, institutions and households know what to expect. We can all anticipate these increases and plan our own spending on capital equipment, housing, appliances and vehicles accordingly.
There has been increased corporate advocacy for carbon taxes recently in Canada. While this is a most welcome development, we need to be aware that some of this advocacy might be aimed at duplicating the current political “success” of B.C.’s stationary carbon tax, as opposed to the tax’s better potential in helping to achieve deep emission reductions.
Pricing carbon can become an end in itself with little regard for a tight link to scientifically informed targets. This kind of low-level and unchanging tax then becomes a foil that provides relief from pressure for significant changes to production methods and for strong climate policies. Such a carbon tax functions as greenwash.
The singular focus of the current B.C. administration on liquefied natural gas has sidelined an earlier commitment to B.C.’s climate targets. A single large LNG facility, under the current climate-policy regime, would make B.C.’s legislated 2050 greenhouse-gas target impossible to achieve. The LNG Project Agreements Act will effectively lock in this policy regime for each LNG facility for 25 years.
For example, upstream methane emissions from fracking gas production are currently unregulated, except for a reporting obligation on emission amounts. The Project Agreements Act makes any carbon taxes or other regulatory mechanisms on these upstream emissions difficult to implement if an LNG project proceeds. This will handicap the next six or so B.C. governments as climatic conditions here and abroad most likely worsen.
The current provincial government has no legitimacy in asserting that it is a climate-policy leader. It cannot take credit for the carbon tax in the upcoming Paris climate-change conference, while undermining its effectiveness at the same time.
Perhaps the biggest benefit of B.C.’s carbon tax is its example to Canada and the world of an uncomplicated policy tool that reduces emissions and raises public revenues. The last thing B.C.’s carbon tax should be known for is its usefulness in providing false policy credit, for greenwash rather than credible climate-policy leadership.
Lee Thiessen is the retired executive director for climate-change policy, Climate Action Secretariat, B.C. Ministry of Environment.