B.C. gov't eyes carbon tax

B.C. gov't eyes carbon tax
John Bermingham, The Province, 25-Oct-2007

The second inconvenient truth: We must tax greenhouse gases
Mark Jaccard, Vancouver Sun, 24-Oct-2007

B.C. mulls economic impact of carbon tax
Globe and Mail, 26-Oct-2007

How Carole Taylor can go green
Lisa Matthaus, Vancouver Sun, 18-Oct-2007

The B.C. government is looking at a new carbon tax to combat climate change.

Finance Minister Carole Taylor yesterday told The Province she's considering the tax in next year's budget, as a way of reducing the burning of fossil fuels.

"We're taking a very serious look at the carbon tax," she said.

Taylor said she and her staff are trying to figure out how a carbon tax would work its way through the economy.

Taylor said the tax could start with a simple per-litre levy on gasoline, or a tax when the fuels are extracted or imported.

"Most of the models actually put the carbon tax on at source, and then it works its way through the economy," she said.

Taylor said climate change is a public issue.

"It's going to mean we all have to get involved," she said. "We all will have to play a role."

There would also be more tax incentives to choose a greener lifestyle and burn less energy.

"We haven't come to any conclusions yet," she said. "All of these tax ideas are on the table."

In an open letter to Taylor, 70 B.C. economists called for a revenue-neutral carbon tax, where higher taxes could be offset by lower income taxes.

University of B.C. economist David Green said working families won't be worse off but will be paying taxes differently.

"If we raise the price of goods and fuels that pollute, a lot of people will use less of them," he said.

The tax could be on fuels, he said, or built into the price of goods that used carbon in the manufacturing process.

The new leader of the B.C. Greens, Jane Sterk, said her party wants a one-cent-per-litre carbon tax on gasoline and a lighter tax load for people with a small eco-footprint.

"If people know that the tax is going to be used appropriately and the tax is not onerous, then people will support that kind of government-imposed regulation," Sterk said.

But Maureen Bader, B.C. director of the Canadian Taxpayers Federation, said carbon taxes won't stop people from driving -- and won't cut greenhouse gas emissions.

"What we see is government trying to engineer a certain social outcome, which may or may not result in what it is they are looking for," she said. "People are still going to need to drive."

jbermingham@png.canwest.com

HOW IT WORKS

A carbon tax is a tax on emissions of carbon dioxide, the leading cause of global warming.

By taxing the burning of fossil fuels such as gasoline, aviation fuel and natural gas, a carbon tax is aimed at reducing their use.

Carbon taxes started in Scandinavia back in the 1990s.

Most recently, Quebec has investigated the idea.

The tax is usually paid when the fuels are extracted or imported.

It is built into the price for the consumer.

Al Gore just won the Nobel Peace Prize for communicating the "inconvenient truth" that humanity is conducting a potentially devastating experiment with the planet's atmosphere.

He shares the prize with the Intergovernmental Panel on Climate Change, whose four reports over the past 15 years dramatically improved our understanding of the climate threat.

But while the climate scientists of the IPCC are justly recognized for their work, we overlook the equally valuable work of this organization's social scientists -- the economists, sociologists, political scientists, etc. who research how to reduce greenhouse gas emissions.

If we are to effectively respond to the climate risk, we need to study closely this group's conclusions that there is a second inconvenient truth: We must tax greenhouse gases or they will keep rising.

During the time of the IPCC's work, rising global temperatures have provided real-world evidence supporting the first inconvenient truth. During the same time, failed efforts to reduce greenhouse gas emissions have provided real-world evidence in support of the second inconvenient truth.

And Canada has provided the most conclusive evidence on the planet.

In 1988, then prime minister Brian Mulroney committed to emission reduction targets for 2000 and 2005. His speeches at the time contained language just as determined and confident as that currently used by Prime Minister Stephen Harper and Premier Gordon Campbell when they trumpet targets for 2020. But the apparently strong convictions of Mulroney, and after him Jean Chretien and Paul Martin, had little effect.

Since 1990, our federal government has launched six major policy initiatives -- with great fanfare and promise -- yet emissions keep climbing.

Experts of the IPCC are convinced they know why.

Our policies thus far have been dominated by wishful thinking, by government hoping that through information and subsidies it could motivate individuals and firms to voluntarily reduce their emissions en masse.

We have had product labels, information brochures, advertisements, awards, Rick Mercer commercials, and lots of speeches. We have had some subsidies, too.

But we have had no compulsion. There have been no financial or regulatory repercussions for any Canadian firm or individual if they maintained or even increased their greenhouse gas emissions. Purchase a propane or natural gas backyard patio heater today and there is virtually no charge on your emissions. Not surprisingly, this and other polluting devices are selling like hotcakes. And so emissions rise.

To the IPCC, it is obvious that emissions will not fall until there is a cost. This cost can be implemented either through a greenhouse gas tax or an economy-wide cap on emissions. In the latter case, the cost of paying for tradable permits that sum to the total cap is equivalent to the tax.

In other words, in both systems we pay for emissions. But be wary. Economists have shown long ago that the tax would be better for the economy than a cap.

Just this month, 69 economists from the University of British Columbia, Simon Fraser University, University of Victoria and the University of Northern B.C. signed an open letter to B.C.'s finance minister, Carole Taylor, calling for a carbon tax in British Columbia (the letter and list of signatories is posted at http://www.econ.ubc.ca/green/open_let.htm).

Some people are nervous about a greenhouse gas tax. They are afraid that government will keep the money, when really it should reduce other taxes by the equivalent amount, and that the tax will devastate the economy, not to mention hurting their pocketbooks.

But unless a government wants to commit political suicide, it will not hit us overnight with a massive carbon tax. It will follow the lead of governments like Norway, which has had a carbon tax since 1992.

The Norwegian tax started at a moderate level with only a slight change in costs, but businesses and consumers know it will climb over the coming decades. Any revenues have been recycled back into the economy in a transparent way, reducing other taxes.

The costs of emitting greenhouse gases are gradually increasing, but this measured pace gives time for consumers and manufacturers to develop products that emit little or no greenhouse gases, without compromising people's standard of living.

There has been no effect on the vibrancy of the Norwegian oil and gas industry, including its exports, yet it is leading the world in technologies that capture and store carbon dioxide, both in petroleum production and soon in electricity generation.

This gradual, revenue-neutral approach is what B.C. economists are asking our provincial government to implement.

Norway is just one example, as many countries in Europe have a carbon tax of some kind. In the United Kingdom, they call it a carbon levy, which they combine with an emissions cap and trade system for industry.

Either way, in those countries that are serious about greenhouse gas emission reduction, making real progress compared to Canada, emissions have a price. Free emissions will not work.

So, when Prime Minister Harper and Premier Campbell tell us they want to reduce greenhouse gas emissions with the least harm to the economy, don't believe them until you see them implement a carbon tax.

Mark Jaccard is professor of resource and environmental management at Simon Fraser University and a former member of the Intergovernmental Panel on Climate Change. His new book, co-authored with Jeffrey Simpson, is Hot Air: Meeting Canada's Climate Change Challenge

Globe and Mail, Page B02, 26-Oct-2007 Brave B.C. talks true carbon tax By Patrick Brethour

VANCOUVER

Stephen Harper and Stephane Dion won't do it, and most Canadian politicians won't even say it out loud.

But in British Columbia, Finance Minister Carole Taylor is merrily pursuing a carbon tax, eyeing a plan that could see the province levy substantial fees on economic choices that spew greenhouse gases, but that would slash other kinds of taxes, including income taxes.

That is the precise policy that market-minded environmentalists and environment-minded economists have long urged, since only pain in the pocketbook - not feel-good ad campaigns, not loophole-riddled regulations - can force the changes in consumer and business behaviour needed to curb climate change. The economic logic of a carbon tax is impeccable; the politics, however, have been unpalatable.

Except in B.C., where Ms. Taylor and the notionally conservative Liberals are suddenly pilfering the policy book of the Green Party. She's a bit lonely arguing the case of short-term pain for long-term green gain. "So, there I am ..." Ms. Taylor says with a laugh, before turning back to the less jovial matter of the provincial tax code.

Ms. Taylor takes pains to stress that no decisions have yet been made. But the mere fact that the Finance Minister is even talking aloud about a carbon tax sends two clear messages. First, the province is serious about tackling climate change, even if other parts of its environmental record are decidedly less green. Second, the government is not afraid to say what everyone knows: Consumers, not just businesses, will have to bear the costs of reducing greenhouse gases.

The straight talk is a marked contrast to Quebec and its faux carbon tax that came into effect earlier this month. It is an anemic effort, designed to generate just $200-million a year. More to the point, the Quebec government took the questionable position of reassuring voters that companies, not consumers, would pay the tax. That is impossible since added costs will flow through to the consumer, particularly in a commodity business such as retail fuels. The attempt to argue otherwise simply underscores how frightened most governments are of asking Canadians for even a minimal sacrifice - and highlights just how radical a path British Columbia is contemplating.

Ms. Taylor will make her decisions about taxes and incentives in the next two months, and all fiscal measures will be announced in February. If any industry is hoping for a repeat of Alberta's greenhouse gas legislation, in which few were asked to do a little over a long time, it should prepare for painful disappointment.

Premier Gordon Campbell has promised a 33-per-cent reduction in current greenhouse gas emissions by 2020, and the government intends to deliver just that. "We will not be able to take little, tiny, tentative steps," Ms. Taylor says. "We are going to have to be very aggressive in our policies and our actions."

What can business expect? The short answer is added costs, and soon. Already the energy industry faces tighter regulations on flaring natural gas, with the new rules kicking in in just over two months. There will be a phase-in period for any new taxes, but Ms. Taylor says any delay will be because of the complexity of the changes. The Premier has laid out a target to hit 13 years from now, but the province is already drawing up interim goals. This will be an issue for the next fiscal year, not something to pass off in the footnotes of forward-looking risks in the next annual report.

B.C.'s actions might include a tax on the production of oil and natural gas, sure to be a hit with an industry still reeling from the royalty uprising in Alberta. It could also mean a fuel tax, equally popular for drivers only now seeing pump prices dip below $1 a litre.

However, the government is also looking at balancing cuts to other levies, including income taxes. Some of the funds raised from carbon taxes might also be used to pay for green projects. The goal is for the changes as a package to be revenue-neutral, at least from the viewpoint of the government. Ms. Taylor says she realizes the peril of using a carbon tax to boost general revenue and that tax-shifting will be her approach.

But what is true over all won't necessarily hold true for individual consumers and businesses. Green choices could easily mean a lower total tax bill. Ms. Taylor might call it tax-shifting, but it could easily be renamed a do-it-yourself tax cut - green, in both senses of the word.

pbrethour@globeandmail.com

VICTORIA - B.C.'s Finance Minister says her officials are looking at whether to introduce a carbon tax aimed at curbing greenhouse-gas emissions.

Finance Minister Carole Taylor says her staff is considering several options to gauge the impact of carbon taxes on economies.

"We're looking at a carbon tax to see if it, in fact, would work," Ms. Taylor said.

"If it would have the desired effect on the economy and climate change, and if there are mitigation measures that you would have to bring in if you did bring in a carbon tax."

Last month, a long list of professors from the province's four universities sent a letter to the Finance Minister urging her to look at the tax, saying it would cut emissions more effectively than emission caps.

Ms. Taylor said the ministry is looking at examples of carbon taxes from around the world and effects that they have on their economies.

She noted Quebec introduced a carbon tax in its last budget, but said there's still a lot of work to do.

Economics and business professors, among others, from the University of British Columbia, Simon Fraser University, the University of Victoria and the University of Northern British Columbia wrote to Ms. Taylor recommending a revenue-neutral carbon tax for the next budget.

"Your government identified action on global warming as a critical policy goal," they wrote. "We believe that a carbon tax is the most efficient and effective way to reach that goal."

They argue the tax would encourage consumers to switch to more environmentally friendly fuels and would also entice manufacturers to find greener ways to produce.

"Right now, the prices of the goods we buy don't fully capture the costs to the environment of making those goods."

The letter also argues a carbon tax is better than regulatory caps on greenhouse-gas emissions because it allows everyone - citizens and businesses - to adjust in ways that work for them.

"Regulatory mandates force a 'one size fits all' approach, are likely more costly to administer and will always be one step behind in terms of the environmental technologies being applied."

Lisa Matthaus
Vancouver Sun
October 18, 2007

'It's not easy bein' green," sings Kermit the Frog, the Muppet stitched together from a discarded ladies' coat that puppeteer Jim Hensen fished out of the trash.

B.C. Finance Minister Carole Taylor, also a commendable fan of recycled attire when it comes to appropriate footwear for delivering provincial budgets, is probably singin' right along with Kermit this fall.

As she prepares the Liberals' much-anticipated 2008 climate-friendly budget, Taylor has the difficult task of harmonizing her government's stated intention to deliver a green budget with provincial policies that produce significant greenhouse gas emissions.

To meet Premier Gordon Campbell's goal of slashing B.C.'s greenhouse gas emissions 33 per cent by 2020, here is what the budget must contain to make sure we don't all end up singing the climate change blues. If the Liberals are finding the switch to green a bit challenging, they can always take a stanza from Kermit as he croons, "Green can be cool and friendly-like."

A carbon tax: Mention the word "tax" to most people and you'll often get a rant about how much the government skims from their paycheques. The carbon tax we're talking about, however, is revenue neutral. In other words, it won't add any money to government coffers and should even leave you with more money in your pocket. Here's how a carbon tax works.

A tax is placed on the use of all fossil fuels -- oil, gas, coal -- according to the amount of greenhouse gases they emit. The prices of goods and services, including the direct purchase of fossil fuels, will shift to reflect their contribution to global warming. Let's say you are trying to decide whether to continue heating your home with oil or to install an energy-efficient heat pump. The carbon tax might be the incentive you need to switch to a heat pump.

The goal is to foster carbon-friendly lifestyles, not to increase the total tax burden on British Columbians. To offset the carbon tax, provincial sales tax or income taxes would be reduced (with more of the return going to lower- and no-income tax brackets). If you choose goods and services that create fewer greenhouse gas emissions, the carbon tax could leave your bank account a little heftier. Notably, carbon taxes are already in place in Quebec, Norway, Finland, Holland, Denmark, Austria, Germany, the United Kingdom and Italy.

Legacy fund: Fossil fuel royalties generate an impressive $1.8 billion a year for B.C. coffers. Yet B.C. is one of the few oil-and-gas-producing jurisdictions that does not allocate a portion of fossil fuel revenues to a "rainy day fund" to use when the fossil fuel gold rush is over. Nor do we set aside any fossil fuel royalties for economic diversification or renewable energy initiatives. Alberta puts money from oil and gas revenues into a Heritage Fund. Alaska sets aside 25 per cent of its oil and gas revenues into its Permanent Fund, valued at almost $39 billion US. Chad, in central Africa, directs 10 per cent of its petroleum revenue into a "future generations fund."

B.C. oil and gas royalties must be channelled into a "Climate Solutions Legacy Fund." Half of the fund's revenues should be set aside for a "rainy day;" the other half should go toward climate change solutions, especially the transition to renewable energy sources. The 2008 budget should ensure that a minimum of 10 per cent of oil and gas revenues go into the fund, with that number increasing over time. The budget should also start to eliminate the more than $250 million in subsidies given to some of the most profitable companies on earth to drill for increasingly valuable fossil fuels.

Transit/transportation: At a whopping 40 per cent, transportation is B.C.'s biggest greenhouse gas emitter. B.C.'s 2008 budget must include funding to develop a 40-year vision for transportation -- one that will achieve more than a 90 per cent reduction in greenhouse gas emissions from light and heavy vehicles combined. This strategy should include significant transit system upgrades and development (particularly in the Lower Mainland), promotion of technologies such as plug-in hybrid electric vehicles, and changes in land use regulation to encourage more compact and climate-friendly communities.

We also need tools and mechanisms to shift the lump-sum costs of driving, such as insurance, to variable costs linked to mileage. These might include Pay-As-You-Drive (PAYD) vehicle insurance, otherwise known as distance-based insurance. In Houston, Texas, a new PAYD insurance scheme saved low-mileage drivers up to 20 per cent in insurance costs.

Biodiversity adaptation plan: We must make sure B.C.'s ecosystems and wildlife are resilient in the face of climate change. The budget should fund a range of biodiversity measures, including a climate change adaptation strategy, increased protection and connectivity for land and seascapes, and public education.

The provincial government is accepting budget submissions until Friday at www.leg.bc.ca/budgetconsultation. Kermit's book was titled, One Frog Can Make a Difference -- and so can you. Green might not be easy, but that's what most British Columbians want our province to be.

Lisa Matthaus is with the Sierra Club of Canada, B.C. Chapter.

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