A NORTHERN MODEL
British Columbia’s carbon tax is often looked at as a model for the rest of the world’s climate policy. Now that it’s 11 years old and rising, residents have mixed feelings.
Story by Logan Moldenhauer | Photos by Montanna Binder
VANCOUVER B.C. — The carbon tax in the Canadian province of British Columbia was among the first of its kind in North America. It is now eleven years old and is influencing carbon-pricing policy across the country. A nation-wide tax has already been implemented across Canada, but none as vigorous and innovative as the one in B.C.
Pricing carbon is risky business. Just like the carbon tax proposed in Washington state, the goal of this tax is to tackle climate change by charging businesses for their carbon emissions. The cost is thought to have passed onto consumers at the gas pump, driving up fuel prices in the province. With B.C. raising their tax in April from the current $35 Canadian per metric ton to $40, some believe the carbon tax is entering territory that will hurt businesses.
The tax was first introduced in 2008 when the government was controlled by the B.C. Liberal Party. It covers a variety of carbon emitting sources, totaling over 70 percent of B.C.’s total emissions, according to Max Kniewasser, Director of the B.C. Clean Economy Program at the Pembina Institute, an energy-focused think tank. Some carbon-emitters not covered under the tax include international plane flights, cruise ships and farms.
Businesses that rely on transportation of goods now have to account for increased fuel costs. That includes Lyle Perry, Vice President of Kerrisdale Lumber in the Kerrisdale neighborhood of west Vancouver. Higher gas prices have meant higher shipping rates for buyers of Kerrisdale products, when before delivery was free. But so far, the company has adapted, he said.
“We are making sure we are bundling incoming shipments to cut down on those fees. It’s somewhat of a cost increase, but it’s not something that I think has really hurt the business. It’s made us act smarter,” said Perry.
Despite changes they’ve had to make, in 2016 Kerrisdale Lumber was one of 160 B.C. businesses to sign onto a Pembina Institute letter supporting the tax increase. The letter was sent to B.C. Premier Cristy Clark.
“It’s increasing the price of the polluting activity, which I think is the right approach,” said Perry.
Since the tax initially took effect, B.C.’s use of petroleum fuel has fallen by 15.1 percent. According to a 2016 study done at the University of British Columbia, the tax may have also helped trigger a rise in the number of fuel-efficient vehicles.
The B.C. Ministry of the Environment and Climate Change Strategy has committed to a 40 percent reduction in greenhouse gas emissions by 2030 through the CleanBC Program.
Today’s B.C. tax is mostly revenue neutral — to keep it from hurting British Columbians, their income taxes are reduced in tandem with money brought in by the carbon tax. Because of this, their income taxes are among the lowest in the country. The tax is designed to be revenue-neutral up to $30 Canadian per metric ton. But with plans to incrementally raise the tax to $50 Canadian per metric ton by 2022, some businesses fear it is moving towards a revenue-positive system, meaning the government would take in more tax dollars than it gives out through the current program. According to the government of B.C.’s website, they are developing a Clean Growth Program, which will use funds made by taxing businesses and put them towards furthering clean industry.
The B.C. Chamber of Commerce, which represents over 36,000 businesses in the province, supported the original revenue-neutral tax back in 2008. But it opposes the changes.
Dan Baxter, the chamber’s director of policy development, government, and stakeholder relations, said the original revenue-neutral carbon tax is more effective at encouraging businesses to turn towards green energy.
“Doing it through a revenue-neutral carbon tax we feel is the most efficient, easiest way to achieve results, versus taking a bit of a gamble or a risk on trying to jumpstart green technology,” Baxter said.
Kniewasser, on the other hand, thinks the carbon tax increases should be supported by B.C. industry. Some money may even be returned to companies based on their performance to comply with the tax, he said. However, most of these funds will still go toward developing strategic green infrastructure and distributing rebate checks to lower income populations in accordance to the financial impact the upcoming tax incremental increases has on them.
“I think, in general, the carbon tax is perceived as a success story in British Columbia, even though it’s often seen as potentially a polarizing policy, Kniewasser said.
