Monday, May 25, 2015

Model for the world - British Columbia significantly reduced its fossil fuel use by adopting a carbon tax


In 2008 British Columbia (B.C.) became the first jurisdiction in North America to adopt an economy-wide carbon taxStewart Elgie, a professor  at University of Ottawa, describes  the results of that tax as “remarkable”, because the move towards low carbon economy was achieved without harming province's economy. The carbon tax is revenue neutral, meaning every dollar generated by the tax is returned to tax payers through reductions in other taxes.
 The carbon tax applies to virtually all emissions from burning fuels, which accounts for an estimated 70 per cent of total emissions in B.C. 
Province started with a relatively low price, $10 a ton of CO2e, and then tax rose gradually to the current $30 per ton, which works out to about 7 cents per liter of gas. At $30 per ton, British Columbia’s government takes in more than a billion dollars in carbon taxes every year, and this tax revenues support more than a billion dollars a year in tax cuts, ranging from reductions to the general corporate and personal tax rates to niche tax credits for children’s arts and fitness programs. Polling shows that a majority of British Columbians (54 percent) supported the tax when it was introduced, and a majority (58 percent) continue to support it today.
 In the first five years after the carbon tax shift, fuel use in B.C. has dropped by 16 per cent; while in the rest of Canada it’s risen by 3 per cent. So, province's fuel efficiency improved by 19 percent compared to the Canada as whole. Moreover, while tax critics had predicted that the tax shift would hurt the province’s economy, in fact, BC’s GDP has outperformed the rest of Canada’s  since 2008.
When B.C. brought in that tax, the expectation was that most of North America would also be bringing in carbon pricing, but  unfortunately it hasn’t happened yet. That is why B.C. has decided to pause the further escalation of its carbon price to see if other jurisdictions would begin to follow the same way. Recently B.C. Premier Christy Clark has announced the creation of a Climate Leadership Team tasked with updating the province's efforts to combat climate change.