Fair and Effective Carbon Pricing

Today, we released a new Climate Justice Project report, Fair and Effective Carbon Pricing: Lessons from BC, by yours truly. I’m excited about getting this paper out into the world, given that climate policy seems to have fallen off the radar in BC – even as we are seeing daily evidence of the impacts of climate change in floods, droughts and other extreme weather.

Much of the report is an analysis of the carbon tax (with some new distributional modeling) and recommendations on next steps, but it also includes a look at BC’s carbon neutral government mandate (which requires the public sector to pay an additional $25 per tonne for its emissions as “offsets”) and the Western Climate Initiative.

In addition to the report, our amazing communications staffers, Sarah Leavitt (Sarah also did the fantastic illustrations for the report) and Terra Poirier, have done up a cool animation based on the report about how to make the carbon tax work.

An oped also appeared in today’s Vancouver Sun:

Look to Europe for Next Phase of BC’s Carbon Tax

By Marc Lee

When it comes to good urban planning, transportation and taking action on climate change, Europe has a lot to teach us.

BC took important baby steps with its Climate Action Plan of 2008. Three years later, however, baby is still clinging to the coffee table.

The centrepiece of BC’s plan was the introduction of North America’s first carbon tax, which makes it more expensive to use fossil fuels. Now it is time to scale up the carbon tax and make it an engine for transformative change. But before we do that, we need to fix the tax so it is more effective and fair.

BC’s carbon tax is currently a weensy $20 a tonne, or about 4 and a half cents per litre at the gas pump But the price on greenhouse gas emissions needs to be about ten times higher – $200 a tonne – by 2020 if it is to have a meaningful impact on the consumption patterns on businesses and individuals.

Some people are bound to blow a gasket when they hear that. But to put it in perspective, $200 a tonne means that in 2020 we’d be paying prices that are the norm today in Europe. The problem comes when people are unfairly punished because they have no alternatives.

The impact of a carbon tax would be strengthened, environmentally and politically, if we used the carbon tax revenues to fund climate action, rather than frittering the money away on tax cuts (as is currently the case). Allocating just half of the revenues from a higher carbon tax to public transit expansion and energy efficiency retrofits for buildings would meet this need, while creating thousands of new green jobs.

Metro Vancouver mayors have been calling for a share of carbon tax revenues, as they search for new sources of funding for transit improvements and expansion. A growing carbon tax could provide billions to build a first-class transit system.

With good public transit and more complete communities – where people live closer to public services, retail outlets, good jobs and amenities like parks and public spaces – our cities would look more like Europe’s. Instead of extreme commuting, people would have a range of options, from walking and biking to transit and car-sharing.

Some key sectors of the BC economy are also currently exempted from paying the carbon tax. Emissions from aluminum, concrete and a sizeable portion from oil and gas production are not covered. At the same time, the BC government is pressing for more development of oil and gas resources that contribute to climate change but only account for a fraction of one percent of BC employment. This is bad policy, as a carbon tax should create a level playing field across the economy.

Moreover, BC currently directs more than half of its carbon tax revenues to corporate income tax cuts. These tax cuts have no link to greenhouse gas emissions, so some of the worst corporate polluters benefit from tax cuts, and simply raise their prices to make up for any carbon tax that they do pay.

A final change needed is to make the carbon tax fair for individuals and families. If we use half the carbon tax revenues to invest in climate action, the other half should flow back to British Columbians, with an emphasis on low-to middle-income households, who pay a bigger share of their income in carbon tax than higher-income households.

Right now, the combined effect of personal and corporate tax cuts means that the richest households in BC get back way more in tax cuts than they pay in carbon tax. We should reverse these tax cuts, while greatly increasing carbon credits to low- to middle-income households, which would help reduce inequality in a province that has one of the worst records in Canada.

Done well, a carbon tax can be a powerful tool for reducing greenhouse gas emissions, creating new green jobs, lowering poverty, and demonstrating stronger leadership from BC on the climate file. It’s part of a vision of a future for BC with a higher quality of life as well as being a leader on climate action.

BC has already made a legislative commitment (to reduce greenhouse gas emissions by one-third by 2020) that would put us where the average European country is today.

Unfortunately, some politicians are trying to drag BC backwards. Their position is, “If other jurisdictions aren’t acting, why should we?” But this is the opposite of leadership. Our leaders need to speak to a positive vision of change, and we don’t need to invent it from scratch. We just need to learn the lessons from across the Atlantic.

Topics: Climate change & energy policy, Environment, resources & sustainability, Provincial budget & finance, Taxes