Climate Protection Priorities for B.C. Budget 2008 and support for proposed B.C. Carbon Tax
April 21, 2008
To protect the health, economy, and future of British Columbians, the province should take action to reduce global warming. A strong concerted response will spur innovation, investment, and jobs in B.C.â€™s growing clean energy sector. Most importantly, it will help get clean, renewable energy technologies into use and effectively reduce B.C.â€™s emissions.
One of the fundamental problems fuelling Canadaâ€™s contribution to global warming is that the atmosphere is treated as a free dumping ground for harmful, heat-trapping emissions. Canadaâ€™s poor record on reducing GHG emissions has largely been the result of relying on voluntary measures and failing to account for the environmental and health costs of carbon pollution through government policy (i.e., regulations and price signals). These weaknesses in Canadaâ€™s economic system have been highlighted by the Organization for Economic Cooperation and Development (OECD). , Canadaâ€™s emissions are now 25.3 per cent above 1990 levels, while B.C.â€™s emissions have risen 30.2 per cent since 1990. The majority of B.C.â€™s emissions are associated with the burning, extraction, and production of fossil fuels (e.g. coal, oil/gasoline, and natural gas). These emissions have significant environmental, social, and human health costs, such as air and water pollution, toxic waste, and habitat and cultural losses.
Pricing carbon emissions through a carbon tax or other means is supported by the worldâ€™s leading climate change scientists and endorsed by several international working groups including the Intergovernmental Panel on Climate Change. Many industrialized countries and jurisdictions are now putting a price on carbon emissions to account for their full environmental and economic costs. For example, Sweden has used a carbon tax to reduce greenhouse gas emissions since 1991. Although a suite of other policies has been used to reduce emissions, the Swedish Ministry of Environment estimated the carbon tax has cut emissions by an additional 20 percent (as opposed to solely relying on regulations) as carbon emissions have decreased more than seven percent since 1990. Swedenâ€™s carbon tax has been credited as the economic tool that has spurred the innovation and deployment of new low-carbon energy technologies such as green heating technologies which have significantly phased out the burning of oil for heating. Swedenâ€™s carbon tax has also been credited in part to putting the country on target to achieve and honour its commitment under the Kyoto Protocol.
The B.C. governmentâ€™s 2007 Throne Speech and the carbon tax proposed in Budget 2008 set out a promising new direction for B.C. to implement the economic solutions required to reduce climate change. The B.C. governmentâ€™s climate change strategy needs to provide a strong economy-wide price signal on carbon emissions through a combination of measures with the proposed B.C. carbon tax including regulations for industrial emissions (e.g. cap-and-trade system) and energy-efficiency standards.
Carbon pricing is accepted by many Canadian business leaders as it offers a flexible and least-cost approach to reducing emissions. Canadaâ€™s leading economists have concluded that a climate change levy would result in a very minor effect on the economy. For example, a report conducted this year for the federal government concluded that a $50 dollar carbon price per tonne of GHG emissions implemented in 2006 would trim about 0.090 per cent of economic GDP in 2010, and then boost the economy by 0.004 percent GDP in 2020.
Economic studies show a carbon tax will spur innovation, investment and jobs in B.C.
Huge economic opportunities are being created in the low-carbon, clean energy industry as more countries and jurisdictions with large economies move forward with laws and policies to reduce global warming. Globally, future energy needs are expected to total over US$20 trillion between now and 2030. The most comprehensive economic study on climate change, authored by the former chief economist of the World Bank, projects the global market for low-carbon energy technologies will be worth at least US$500 billion annually and perhaps much more by 2050. B.C. is well-suited to establish a competitive advantage in North America as an innovator and developer of clean, renewable energy and transportation technologies. For example, B.C. has a wealth of renewable energy resources including one of the best wind power resources in the world. Today, B.C. is home to about 60 companies employing 3,000 British Columbians generating $700 million in annual revenues in the renewable energy and alternative power sector.
How the B.C. carbon tax should work with regulations to reduce industrial emissions
The proposed carbon tax in the B.C. budget applies to the use and combustion of fossil fuels in the province based on their carbon content and contribution to global warming. This proposed carbon price will cover 70 percent of B.C.â€™s total greenhouse gas emissions, and coverâ€™s nearly all of B.C.â€™s emissions associated with the burning or combustion of fossil fuels. Some industrial process emissions (non-combustion) are exempt from the carbon tax such as landfill emissions, fugitive (e.g. venting and pipeline leaks) emissions from the production of oil and gas, and emissions associated with the production of some metals such as aluminium. The main reason these sectors are currently exempt is because the provincial and federal governments does not yet have equipment installed on industrial facilities to accurately account for these process emissions. However, industrial emissions produced from the combustion of fossil fuels will be subject to paying the carbon tax. For example, more than half of the emissions produced by the oil and gas industry will pay the carbon tax (e.g. flaring emissions by the oil and gas industry). Also, the cement industry will pay the tax based on the amount of coal they burn in the production of lime for cement. To ensure fairness and due responsibility, emission sectors that are exempt from the carbon tax must be covered by other policies such as mandatory regulations that ensure industry reduce their fair share of greenhouse gas emissions as soon as possible. The B.C. government has promised to put in place regulations that cap industrial emissions and reduce them over time (called a cap-and-trade system) and has indicated the rules and regulations will be released in August 2008. A delay in implementing a carbon price signal on industrial emissions creates many risks including higher cumulative emissions, a steeper carbon price in the future, and increased economic costs.
1. Support the proposed B.C. carbon tax as introduced in B.C. Budget 2008. As the carbon tax rises over time further measure should be taken to protect low-income households such as indexing the tax credit with the carbon price increases. Should any future analysis indicate any inequity for certain regions in the province, we would encourage the B.C. government to introduce targets programs to assist these regions with the required infrastructure to reduce their emissions such as energy-efficiency retrofit programs for communities or households.
2. In addition to support for the proposed B.C. carbon tax, a comprehensive economic approach is required to achieve the B.C. governmentâ€™s climate change goals. We recommend the B.C. government show global leadership by dedicating sufficient environmental protection funding to achieve the required reductions in greenhouse gas emissions to avoid dangerous levels of climate change, including:
â€¢ A revolving fund for municipalities so they can access low-interest-rate loans and capital to improve the energy efficiency of buildings and other emission reduction projects
â€¢ A transition fund to develop sustainable energy industries and assist the transition of local economies that currently depend on the fossil-fuel sector
â€¢ Fixed price incentives for low-impact renewable energy technologies (i.e., feed in-tariffs)
â€¢ A long-term, stable provincial funding commitment for public transit
â€¢ A phase-out of public subsidies to the fossil-fuel sector
â€¢ Feebates (i.e., tax shifting) for consumer products such as appliances and vehicles
â€¢ Scientific research to better understand and prepare for the impacts of climate change
â€¢ Public education programs
FOR MORE INFORMATION CONTACT:
Ian Bruce, Climate Change Specialist
David Suzuki Foundation
2211 West 4th Ave., Suite 219
Vancouver, B.C. V6K 4S2
T: 604.732.4228 ext. 275