The Environmental Studies Association of Canada hosted a panel exploring “The Benefits of Carbon Taxation”, which was sponsored by the Pacific Institute for Climate Solutions (PICS) and held on Tuesday, June 4 in the Bob Wright Centre.
The panel consisted of James Mack, head of the BC Climate Action Secretariat within the Ministry of Environment, Stewart Elgie, professor of law and economics at the University of Ottawa and Katya Rhodes, Vanier scholar and PhD candidate in sustainable energy management at SFU.
The panel explored the history of BC’s carbon tax and evaluated its environmental and economic impact, concluding that the policy is successful in reducing carbon emissions without deterring economic production. Panelists explained that the carbon tax is successful because it allows individuals and corporations freedom in deciding how to cut emissions, and directs innovation by rewarding the lowest-carbon technologies.
Tom Pederson, director of PICS, opened the panel discussion by highlighting the cause and impact of climate change, beginning with an “iconic graph” that show the upward trajectory of CO2 in the atmosphere and outlined the extreme weather conditions in 2010.
“Russia baked, Pakistan flooded, Queensland got hit by a major cyclone...[and] the United States got soaked in the northern states along with Saskatchewan and Manitoba,” says Pederson, who then went on to show how, in effect, world food prices rose and contributed to the Arab Uprisings. Another graph showed a distinct correlation between the rise in food prices and riots around the world.
James Mack provided a provincial perspective with background information that cited the mountain pine beetle epidemic as the event that brought climate change to forefront of the province’s agenda.
“It really hit home, I think, for the government that this was a global environmental problem that was impacting BC and so BC needed to be a part of the solution,” says Mack.
British Columbia is considered a leader, with its carbon tax implemented in 2008 alongside CO2 emissions targets set to be reduced 33% by 2020 and 80% by 2050. Mack says the BC government’s cornerstone policy is that the carbon tax is revenue neutral, where the $1.2 billion/year it generates is translated into tax cuts on corporate and income tax (even with the corporate taxes' 1% increase from the 2013 Budget, BC has among the lowest tax rates).
A review conducted by the Ministry of Finance in February 2013 confirmed that BC’s overall economic performance has continued to keep pace or surpass that of Canada and BC in the past, says Mack.
He commented that BC’s carbon tax is one of the most comprehensive in the world. Stewart Elgie showed that the use of all types of fuel has dropped 15% since 2008, save for those from aviation, which is exempt from the carbon tax.
Elgie says that this is not shocking to economists. “When you charge more for something, people use less of it...That’s not revolutionary; it’s pretty much what all modern economics is based on.”
He says that the carbon tax is not as controversial as it comes across in media, pointing to polls that show the majority consistently supporting the carbon tax. It is rare, says Elgie, for a tax policy to earn 64% as the carbon tax did in the latest poll.
Rhodes notes, however, that a lack of political acceptability of carbon tax remains a prominent issue. She says that the tax is hard to implement and sustain in the long term, noting that media coverage is often unfavourable.
Rhodes went on to suggest ways in which to make carbon taxes more effective, such as raising the rate substantially (to $200/tonne), providing a long-term schedule for tax rates and keeping the tax neutral. As well, she spoke about ways government can supplement carbon tax in reducing emissions by regulating emissions from vehicles, electricity and buildings, installing cap and trade policies, or expanding public transit and infrastructure for environmentally-friendly vehicles.