Research Report

The British Columbia Carbon Tax: A Failed Experiment

British Columbia’s carbon tax has been held up as a climate success, but an analysis of the province’s emissions under the tax tells another story.


RPT_1609_CarbonTax_FINAL.pdf

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New report from Food & Water Watch

Our planet’s climate crisis is intensifying, but many in industry, government and even the advocacy community have turned to market mechanisms to alleviate climate change instead of regulating the pollutants that cause it.

These free-market approaches rely on putting a “price” on climate change-inducing emissions — such as imposing taxes on carbon — as an indirect method to reduce these pollutants.

The Canadian province of British Columbia implemented a carbon tax on certain fossil fuels in July of 2008. Some experts and pricing proponents are using the British Columbia carbon tax example to promote carbon taxes and other market mechanisms as a way to purportedly reduce greenhouse gas emissions and address our climate problem.

Unfortunately for these free-market proponents, the real-world record fails to demonstrate that British Columbia’s carbon tax reduced carbon emissions, fossil fuel consumption or vehicle travel.

Most of the modest and short-term reductions in emissions seem to be related primarily to the 2008 global recession, not to the carbon tax. More recently, British Columbia’s emissions have resumed their rise.

This report examines the British Columbia program and finds that this type of pricing approach is not going to save the planet or safeguard our communities. A more straightforward approach of regulating emissions would be significantly more effective at curbing climate change.

Key Findings

  • During the years that the tax was in place for the entire year, from 2009 to 2014, greenhouse gas emissions from taxed sources rose by a total of 4.3 percent. During this same time period, emissions from non-taxed sources fell by a total of 2.1 percent.
  • The one-time drop in emissions from 2008 to 2009 does not appear to be driven by the carbon tax. The average annual year-to-year change in taxed greenhouse gas emissions barely changed after the carbon tax went into effect.
  • According to the most recent data released by the province, from 2011 to 2014, the total taxed greenhouse gas emissions rose by 5.3 percent. Meanwhile, total untaxed emissions decreased by 2.5 percent, and the annual average growth for taxed emissions rose by 1.7 percent annually and exceeded untaxed emissions.
  • Canada projects that British Columbia’s total greenhouse gas emissions will increase over coming years even with the tax in place.

This data from British Columbia, which shows the carbon tax has failed the reduce carbon emissions in the ten years since it was implemented, gives little reason to believe a carbon tax would curb emissions in the U.S. or elsewhere.

Meanwhile the oil and gas industry is throwing its support behind carbon taxes, rather than strong regulations to limit emissions, arguing that market solutions are the best way to address climate change.

Read the report

Posted in Books & Reports, Carbon Pricing

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2 Comments on "The British Columbia Carbon Tax: A Failed Experiment"

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The Carbon tax is useful if the Corporations want to spend money to change and if the governments use it to shame the corporations publicly to change. But, for a right wing government like Clark liberals in BC is just cheap window dressing that is never enforced.
In fact, the BC government is going out of its way to encourage foreign Multinationals to do business any way they want, which is why they support TPP Trade agreement to give the Big Multinationals free pass to do what ever they want

I haven’t read this report. But BC’s carbon tax has been discussed in Norway lately, as a possible carbon-tax compromise between tax promoters and tax haters.

BC’s carbon tax is most remarkable by the fact that it has become popular. Some 60% of both B-Columbians and other Canadians are in favour of the tax. James Hansen, who proposes a much better concept for pricing carbon (see discussion on C&C), has made a fundamental point, which even anti-market-solition folks must accept: as long as fossil fuels are the cheapest energy source, they are going to be burned.
Accordingly, we need both to raise the carbon prices, and to fight for regulations. But the latter struggle is doomed to fail, if fossil fuels continue to be the cheapest energy available.
BC never raised their carbon tax to a level which would have any significant effect. In Norway, we have carbon taxes at a much higher level—generally at abount 65USD per ton CO2. This has some effect on the amount burned domestically, but as the taxes don’t increase, we get used to them, and don’t switch to other sources.
The carbon prices have to increase steadily over time, until fossil fuels are too expensive to compete against renewables. But we can never achieve necessary popular support for such policies, unless these taxes are returned to the people directly. Jim Hansen proposes distribution of the provenue by equal shares among the public, which in fact means that the poluter pays, and that money generally are transferred from the wealthy to low-income people.
Using this model, we can achieve what is needed: phasing fossil fuels out of the economy with popular support. This popular support, in turn, would strengthen our campaings for regulating the extraction of fossil fuels.
British Columbias carbon tax seems to be so weak, and with a formula for distributing the tax funds to the tax payers, which mainly benefits business. This is not the way to go, although there are some lessons to be learner from it.

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