Scheer says British Columbia's carbon tax hasn't worked. Expert studies say it has
How one province's carbon program has become a touchstone for climate policy
A significant piece of the federal election debate in 2019 rests on what the government of British Columbia did on July 1, 2008 — and how you understand what happened after that.
Faced Tuesday night with an undecided voter who was worried about climate change, but who didn't think he could afford to pay the costs associated with a carbon tax, Conservative Leader Andrew Scheer offered a reassuring response: a Conservative government would repeal the federal carbon levy.
But then Scheer pushed his argument a step further. A carbon tax, he said, doesn't reduce emissions.
"It's not working," he said. "We saw in British Columbia, emissions go up in the most recent year, even though they've had a carbon tax for quite a long time. So, based on the fact that it's not working, why would we continue to go down that path?"
British Columbia's carbon tax, introduced by Gordon Campbell's government, came into effect in July 2008. It was initially set at $10 per tonne and increased $5 each year until it reached $30 per tonne in 2012.
It's more accurate to say British Columbia's annual emissions have remained at approximately the same level. In 2005, according to federal data, B.C. produced 63 megatonnes of greenhouse gas emissions. In 2017, the province's emissions totalled 62 megatonnes, a decrease of 1.8 per cent.
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By that simple measure, not much has changed. But that doesn't mean the carbon tax hasn't worked.
Measuring the carbon tax's impact
Between 2005 and 2017, British Columbia's population and economy grew significantly — from 2008 to 2017, the province's economy grew by 23 per cent and the population increased by 17 per cent. In that respect, it is notable that B.C.'s emissions didn't also rise. (Over the same period, Alberta's emissions rose by 18 per cent.)
But to properly assess the impact of the carbon tax, you have to consider a counterfactual scenario in which the carbon tax was not in place.
Multiple studies have considered that question and those studies found the carbon tax was responsible for a decrease in fuel consumption and emissions. A study in 2016 linked the carbon tax with the purchase of more fuel-efficient vehicles.
"The primary objective of the B.C. carbon tax is to reduce GHG emissions and essentially all studies show it is doing just that, with reductions 5–15 per cent below the counterfactual reference level," concluded a 2015 survey of published research.
A reduction of five to 15 per cent is not enough, on its own, to achieve Canada's international target, but it would be a significant contribution. The federal price is currently scheduled to reach $50 per tonne.
In their own defence, the Conservatives point to a study which observed that demand for diesel fuel was inelastic — that it's less likely to be affected by changes in price. But even that study estimated that the carbon tax in British Columbia had reduced the per capita use of diesel.
More broadly, the evidence also shows that British Columbia's economy has not suffered as a result of the carbon tax.
International examples of carbon pricing
British Columbia's carbon tax was the best example in Canada of a revenue-neutral carbon tax — one that offsets its cost with cuts to other taxes — though the province's use of the revenue has changed over time and the current government is pledging to use the revenue in different ways.
But it's not the only instance of carbon pricing being associated with a drop in emissions. Significant reductions have coincided with carbon levies in the United Kingdom, Sweden and Australia. The European Union has been covered by a cap-and-trade system since 2005 and its emissions have fallen by eight per cent (China is planning to launch its own cap-and-trade market in 2020).
The World Bank, the International Monetary Fund and more than 3,000 economists in the United States have expressed support for pricing carbon as a means to reduce emissions — in large part because implementing a price on emissions is likely to reduce emissions at the lowest possible cost to the economy. Though pricing policies are easier to attack, alternative policies to achieve comparable reductions will tend to be more expensive.
But economics is easier than politics.
The politics and the facts
A year after the Campbell government implemented a carbon tax, it had to fight for re-election against B.C. New Democrats who vowed to "axe the tax." Campbell's B.C. Liberals were re-elected, but his successor, Christy Clark, declined to increase the tax after 2012. As a result, the price stayed at $30 per tonne until, coincidentally, an NDP government raised it.
If Justin Trudeau's Liberals retain power after Oct. 21, a similar convergence on carbon pricing could occur at the federal level, with the Conservatives choosing to pursue a different line of attack.
In fact, shortly after condemning a broad-based carbon tax on Tuesday night, Scheer found himself praising his own plan to apply a carbon levy to large emitters (Scheer's plan would replace the Liberal regulations on heavy emitters with a policy that requires firms to invest an unspecified amount toward research or clean technology).
Regardless, Scheer's climate platform would result in higher emissions. But he can promise to repeal the federal carbon tax.
The undecided voter Scheer was faced with on Tuesday night was evidence that there is an audience for political leaders who promise to repeal carbon-pricing policies. Not even the federal rebate — and analysis showing that most families will receive more than they pay — was enough to convince the skeptical resident of New Brunswick.
All of which can be debated.
But that debate should be based on a real understanding of the options and the known merits of the policies that are being proposed.
- This story has been edited from earlier versions that incorrectly referred to the B.C. carbon tax as "revenue neutral" in the present tense. In fact, while the carbon tax was initially revenue neutral - with revenues from the tax offset by corresponding cuts to other taxes - in recent years the B.C. government has chosen to use some of the revenue from the carbon tax in other ways. The story was also updated to add specific numbers for population and economic growth. Additionally, the earlier changes to this story should have been accompanied by a correction notice.Oct 02, 2019 10:36 PM ET