Originally posted on April 15, 2009 at 7:35 pm
Mark Jaccard has recently released an analysis of the BC NDP’s main policy to deal with global warming concluding that:
if BC were to try to reach its aggressive GHG emissions reduction target without emissions pricing for non-industrial emitters, relying instead on industry and government funds to subsidize relatively ineffective energy efficiency and fuel switching by non-industrial emitters, the outcome is likely to be a dramatic reduction in BC industrial production. This would have significant negative repercussions for employment levels, especially in some key BC communities that are dependent on one or two specific large industrial GHG emitters. The loss of jobs will be substantial.
In other words, the NDP is only pricing carbon for industrial emitters, and using those revenues to provide subsidies for individuals and households who make energy efficiency or fuel switching investments to reduce their GHG emissions. Climate policy has tried to achieve GHG emissions reductions in the manner (called non-compulsory approaches by Jaccard) for decades, and GHG emissions have continued to rise. Non-compulsory approaches simply aren’t very effective.
So, Jaccard concludes, that in order for the BC NDP’s climate policy to achieve its stated goal it must impose a much larger cost for emissions by industry. This would likely lead to a a dramatic reduction in BC industrial production and significant job losses.
In fact their plan is so bad that several high profile environmental have publically renounce support for BC NDP.
The David Suzuki Foundation, the Pembina Institute and ForestEthics held a joint news conference… to call on the party to reverse its position on the tax.
“The NDP has chosen what they think will be a publicly acceptable but climate-irresponsible approach. And that is, they want to step backward the pricing of carbon and backwards on the policies that are in place in the hopes that that may get them elected,” Merran Smith, a climate director with ForestEthics, said Monday.
This is particularly troublesome for the BC NDP as Richard Littlemore explain:
For people not from Canada’s coast, the NDP is a traditional coalition of social policy progressives, labor activists and environmentalists. This particular iteration of the NDP, however, appears intent upon carving off its environmental arm in favour of pandering to the libertarian types who just love to scream about government taxation.
I expect many BC NDP supporters will feel alienated by this move. In fact to me this whole move seems as opposition for the sake opposition. They are sacrificing their stated principles in order to differentiate themselves form the BC Liberals.
Of course the environmental issue is far from black and white and as Adam Rawlings points out, the BC NDP’s position on other climate related issues is arguably stronger than the BC Liberal’s, specifically their commitment to transit and efficiency, though Jaccard’s analysis disagrees with that last one. And while I am not against such initiatives per se, I am more comfortable with enabling the market to solve these problems.
And lets not forget that the BC Liberals have more than a few black marks on their environmental record as well.
Whether it was inadvertent or by design, Finance Minister Colin Hansen yanked down his government’s green facade last week by stating that offshore oil and gas drilling on the B.C. coast would fit in nicely with the province’s climate action goals.
The Campbell government’s energy policy, [threatens to] lay waste to 600 to 700 of our rivers and streams in this wonderful province of ours… BC Hydro is no longer allowed to bring in new sources of energy. That must be done by the private sector, which is being allowed to stake rivers like old-time prospectors staked claims for gold. These private firms then will divert “their” rivers, often through tunnels up to 20 kilometres in length, thus reducing the flow in portions of the river bed by up to 95 per cent.
The provincial government is looking to spend up to $5 million on projects to plant trees or make existing ones grow faster through fertilizer and other means… However, Nicholas Heap of the Vancouver-based David Suzuki Foundation is critical of carbon credit schemes based on tree planting.
It can take decades for the trees to grow enough to make a difference, he said, and the trees will eventually rot and release the greenhouse gas back into the atmosphere.
“Environmentalists like ourselves have been talking about the wonderful myriad benefits of trees and planting forests,” Heap said.
“But when you’re planting trees primarily or only as a carbon offset, we’re not playing to the greatest strength of trees. There are other means of producing offsets that actually out-compete planting forests.”
Which is particularly disturbing given that our trees are dying twice as quickly as they did three decades ago and scientists think global warming is to blame.
Still when it comes to global warming, the BC NDP’s plan is bad for both the economy and the environment. It’s the best worst of both worlds.
UPDATE: The New York Time’s Green Inc. blog has a good write up on this as well.
According to the three groups [the Pembina Institute, the David Suzuki Foundation and ForestEthics], the carbon tax now covers 76 percent of the province’s greenhouse gas emissions while the New Democrats’ plan would lower that to 32 percent.
UPDATE 2: Andrew Weaver, one of Canada’s top climate scientists, joins the fray!
NDP’s ‘environmental plan’ just a gimmick
Party’s ‘axe the tax’ campaign is pure political opportunism
In a desperate attempt to gain votes, they introduced an “axe the tax” gimmick that is mired in propaganda and misinformation. The NDP leader refers to the carbon tax as a “gas tax,” even though the revenue-neutral tax is applied to all fossil fuel combustion.
Of course, this is nothing more than another gimmick designed to make people think that the government is making a money grab from regular people who have to drive to work and school daily.
The NDP make demonstrably false assertions that rural people are unfairly penalized (when in fact people in rural communities typically drive less and have smaller homes); they argue that consumers pay the brunt of the cost (when it’s industry who pays the lion’s share and individuals reap the benefits from concomitant income tax reductions)…
The NDP’s so-called environmental platform is regressive and counter-productive. I hope our message to the world from the election is that political opportunism, gimmickry and short-sightedness doesn’t work with B.C. voters; British Columbians truly care about the environment and intergenerational equity.
UPDATE 3: Despite what the NDP claims the National Roundtable on the Environment and the Economy did not endorse the BC NDP GHG reduction plan:
Matt Horne, Director of BC Energy Solutions for the Pembina Institute, made the following statement in response to the BC NDP’s media release claiming that the National Round Table on the Environment and the Economy “rejects carbon tax in favour of cap & trade”:
“The National Round Table report says that Canada needs an economy-wide price on carbon as soon as possible. Experts agree that this could be accomplished through either a carbon tax or a cap and trade system. The Round Table is opting for cap and trade only to align with federal government policy.
The B.C. NDP’s proposal for a limited cap on industrial emitters would only cover up to 32 per cent of B.C.’s pollution, whereas B.C.’s carbon tax covers 76 per cent. So rather than being consistent with the Round Table’s call for an economy-wide price, the NDP’s proposal would take B.C. in the opposite direction.”
The NDP’s assertion that a carbon tax would cost more than a cap and trade system is simply wrong, and is not supported by the Round Table report.”
UPDATE 4: David Suzuki has now personally come out against the NDP as well:
“If [Liberal Leader Gordon Campbell] goes down because of axe the tax, the repercussions are the carbon tax will be toxic for future politicians,” David Suzuki said yesterday.
“No politician will raise it. That’s why environmentalists are so upset.”…
Mr. Suzuki did not endorse the Liberals. He said there is plenty to criticize about themin terms of the environment. He noted that he has been surprised at the absence of more extensive discussion of the Green Party, which has no seats in the legislature, as a “credible” alternative.
He said he expects many conflicted voters could vote Green.
“If environmental voters decide they can’t stomach voting for the NDP or the Liberals, they have got the Greens,” he said. “If you vote for the Greens, you are making a statement about the carbon tax and the other things you don’t like about the Liberals and the NDP.
UPDATE 5: More from Mark Jaccard, via the Vancouver Sun
A recent B.C. NDP press release states that Canada’s National Roundtable on the Environment and the Economy (on which I serve) “clearly supports” the NDP’s climate policy proposal to scrap the carbon tax and that I am Premier Gordon Campbell’s “top adviser” on B.C.’s carbon tax. Neither of these statements is true.
I have never met or communicated with Premier Campbell and did not advise the B.C. government as it rolled out its key climate policies in 2007 and early 2008, including the carbon tax. My only recent advisory role in B.C. was for the climate action team, a committee of citizens and experts proposing climate policy for B.C. in the period 2012 to 2020.
In the first half of 2008, I attended six meetings as the team prepared the report it publicly released in July, long after the carbon tax had been implemented in the February 2008 budget. Ironically, my role advising a citizen’s committee (rather than politicians) was identical to the function I performed in 1998 for the greenhouse gas forum, a citizen advisory committee created by B.C.’s NDP government.
Of course, the NDP did not call me Campbell’s “top adviser” from 2001 to 2006 when I repeatedly criticized his ineffective climate policies of that period. But now that I am applauding his recent climate policies and sharply criticizing the NDP’s alternatives, their strategy is to claim I am no longer independent.
Had I been Campbell’s policy adviser in 2007, when he finally got serious about the climate risk, I would have counselled him against implementing the carbon tax. This is the recommendation I gave, when asked, to Rona Ambrose as Canada’s Conservative environment minister in 2006, to Michael Ignatieff during his campaign for Liberal leader in the same year, and to Stephane Dion in May 2008. I would have told Campbell that while a carbon tax is the most economically efficient and effective way of reducing greenhouse gas emissions, it would be politically safer to implement an equivalent cap-and-trade system instead.
With cap-and-trade, the government allocates tradable emissions permits that add up to a fixed cap, which would decline over time, to reduce emissions. As the cap declines, the value of the smaller number of permits starts to rise, which in turn increases the price of fossil fuels like natural gas, gasoline and home heating oil. Thus, an “economy-wide” cap-and-trade system has the same effect on the price of gasoline as the carbon tax. But when comparing the two, political optics favours cap-and-trade.
I know this sounds cynical. But politicians implementing a carbon tax face a great risk that unscrupulous political opponents will mislead the public by claiming we can reduce emissions without taxing gasoline, conveniently failing to mention that their cap-and-trade alternative should have the same upward effect on its price for the same emissions reductions.
The NDP has taken the game one step further. It is promising British Columbians that the cap-and-trade “alternative” would apply only to industrial emissions, meaning that the price of gasoline would not increase. Yet, the party claims it can match Campbell’s promise to reduce emissions 33 per cent by 2020.
Think of that. The current carbon tax in B.C. covers 75 per cent of emissions, which makes it a leading policy in terms of its coverage. (Not-yet-taxed emissions sources include municipal landfills, agriculture and a few unique industrial process emissions, although the government is apparently working on this.)
The NDP alternative would role this coverage back to about 35 per cent of emissions, yet it promises to achieve the same reductions in 2020. In a recent study, I estimated that major emissions reductions from a cap-and-trade that applied only to industry (with accompanying regulations in transportation and other sectors) would lead to dramatic increases in industrial production costs, forcing cutbacks and even plant closures. Direct and indirect job losses in B.C. would be at least 60,000 from the NDP policy.
This is one of the reasons why we members of the national roundtable say repeatedly in our report that the important issue is not cap-and-trade versus carbon tax, but rather emissions coverage. The report and its technical background documents are full of quotes like “Good design is more important than instrument choice. Either carbon taxes or cap-and-trade systems could be designed to be cost-effective.”
The important message from the roundtable’s new report is to ignore the debate on cap-and-trade versus carbon tax and instead focus on emissions coverage.
For a given level of emissions reduction, the fairer, more effective and more efficient policy is one that covers more emissions. In B.C., it is a choice between 75 per cent and 35 per cent.
UPDATE 6: Conservation Voters of BC launches “Anybody But Carole” campaign, via DeSmogBlog
Frustrated by what they see as a failure in leadership by the BC NDP on the issue of climate change, the high profile Conservation Voters of BC announced today that they are endorsing “Anybody But Carole” in NDP leader Carole James riding of Victoria-Beacon Hill.
UPDATE 7: A high profile group of academics co-wrote a column in the Vancouver Sun today accusing the BC NDP of “intellectual dishonesty” in regards to their position on the carbon tax.
Debunking myths about the B.C. carbon tax
By John Robinson, Shi-Ling Hsu, David Duff and Nancy Olewiler, Special to the Sun
Climate “skeptics” — people who doubt, despite the mounds of evidence, that climate change is a problem worth addressing — are less prevalent today, but they been replaced by purveyors of a new myth: people who tell voters that we can solve the climate change problem without the need for any change in how we live our lives.
The simple but elusive truth is, of course, that climate change is our collective responsibility, and we all have to find ways to transform the energy systems on our planet and to change the way we live. There is no solution to climate change that does not involve changes in consumption and production patterns.
In B.C., Carole James and the NDP are these new mythmakers. The BC NDP promise to “axe the tax,” should they win the provincial election, while accomplishing all the same goals with no cost to BC taxpayers, is nothing short of intellectual dishonesty.
The simple but obscured truth about climate change is that it is a problem with consumption as well as production. Especially in Canada and the U.S., our homes, buildings and communities are clumsy and inefficient, and are built upon assumptions of low prices for fossil fuels. We consume too much of the wrong things because we do not pay the cost of the carbon emissions embedded in everything we do and consume, costs that include the damage we do to our environment — our life support systems.
The consensus among economists and energy policy experts is just as strong as that over climate science: if we want to reduce carbon emissions significantly, then, whatever else we do in the form of regulation, we must place a price on emitting carbon dioxide, and we must price it throughout the economy. One policy effectively addresses this core problem of consumption: a consumption-focused carbon tax. Carbon taxes have been derided as a “tax on everything,” but that is precisely what is needed.
Everything in our economy uses too much fossil fuel, and is produced and shipped in a way that emits too much carbon. That just happens to be a politically difficult thing to say because few politicians are willing to tell voters that we have to consume less of those things that contain carbon or are produced by carbon-based fuels.
Since price increases cause us to consume less or different things, a carbon tax will reduce our consumption of carbon-intensive goods and services and also provide a strong incentive for industry to switch to less carbon-intensive processes and products. Moreover, the B.C. carbon tax applies to virtually all carbon using activities in the province.
The cap and trade policy, proposed by the B.C. NDP to replace the carbon tax, will affect only about one-third of emissions and thus will require permit prices that are much higher than the carbon tax to achieve the same reductions. As pointed out recently by economist Mark Jaccard, such a policy would be ruinous to B.C. industry and result in significant job loss in the province.
Moreover, it is a dangerous illusion to pretend that the cost increases caused by a cap and trade policy would not be passed on to consumers. A better approach, which is part of B.C.’s current climate policy, is to add acap and trade program for industrial emitters to the carbon tax in 2012, adjusted to eliminate double counting.
We should worry, of course, about any tax policy that disproportionately affects the poorer among us. And here the NDP position is also deeply misleading. Through a refundable Climate Action Tax Credit paid to low-income households, the B.C. carbon tax does a very reasonable job of addressing the problems of poor populations that might be disproportionately affected by the carbon tax. For those who think that corporations should bear the bulk of the pain in paying for climate change, remember two things about the BC carbon tax: (1) every penny collected through the tax must, by law, be returned to taxpayers in the form of reductions to other taxes; and (2) while one-third of the carbon tax revenues are paid by individuals and two-thirds by industry, two-thirds of the tax reductions benefit individuals and one-third corporations.
In other words, the current B.C. carbon tax represents a shift in tax burdens from individuals to industry.
The logic of our situation can be summed up in a few sentences. We need to price carbon if we are to achieve our emission reduction goals. Such pricing should cover as wide a spectrum of carbon-using activities as possible and be at a high enough price that it will actually effect energy-using behaviour. The current B.C. carbon tax accomplishes these goals while returning all of the tax revenue to B.C. consumers and industries, thus changing emission-causing behaviour at the point of consumption, at least cost to the taxpayer.
B.C. now has the most effective and equitable climate change policy in North America. In our view it is the only policy now in effect that will actually reduce carbon emissions significantly. Citizens concerned about climate change should celebrate and support this policy. Carbon taxes have been in effect in parts of Europe, but the conventional wisdom is that Canada and the U.S., historically hostile to taxes and particularly consumption taxes, will never accept them. The world is watching to see whether good policy will prevail over opportunistic politics when BC voters go to the polls May 12.
John Robinson is a Professor in the UBC Institute of Resources, Environment, and Sustainability, and was a lead author of the last three reports of the Intergovernmental Panel of Climate Change. Shi-Ling Hsu and David Duff are Associate Professors in the UBC Faculty of Law. Nancy Olewiler is Director and Professor of the Public Policy Program at Simon Fraser University.
UPDATE 8: The Ottawa Citizen joins the fray, comparing the BC NDP to Federal Conservative Party.
There is nothing wrong with criticizing the details of the Campbell tax-shift. But tax-shifting in general is an idea so sound that support for it unites nearly all economists and nearly all environmentalists. Done right, it can influence behaviour while putting money in people’s pockets.
Instead of trying to create the best possible tax shift for B.C., the provincial NDP has chosen to follow the populist path blazed by the federal Conservatives, and portray the tax-shift as a cash-grab. This has lost the NDP the support of prominent environmentalists, including Tzeporah Berman. David Suzuki has warned that if the Liberal government in B.C. falls because of the carbon tax, no Canadian politician will be likely to champion tax-shifting for years.
So this election in B.C. is one to watch, even for people who live half a country away.
UPDATE 9: Nature News has a great writeup on the BC Carbon tax and the upcoming election.
North America’s first carbon tax faces judgement
British Columbia’s provincial election showcases climate change politics.
Canadian provincial elections don’t normally merit international attention. But economists and environmentalists are looking to the 12 May election in British Columbia, Canada’s westernmost province, as a test of several climate change policies — including North America’s first carbon tax.
The incumbent BC Liberal party government imposed a province-wide carbon tax in July 2008. Since then, it has been a major campaign issue.
“We are keenly interested in watching this unfold,” says economist Charles Komanoff, co-founder of the non-profit Carbon Tax Centre in New York. “If [the British Columbia tax] persists, it will give a big boost to the cause in the United States.”
British Columbia’s carbon tax was unpopular with many voters from the start, in part because it boosted fuel costs just when oil prices were at a record high. The opposing British Columbia New Democratic Party (NDP) has vowed to “axe the tax”, arguing that it is ineffective and unfair on remote populations. Ironically, the NDP has traditionally been ‘greener’ than the Liberals; it has been accused by some, including Graham Saul of Climate Action Network Canada in Ottawa, Ontario, of taking an anti-carbon-tax stance solely to court votes in a close-running election.
It can be a sensitive political issue. In Canada’s federal election of 2008, the Liberal party campaigned for the “green shift”, a plan to put more of the tax burden onto polluters. They lost a significant number of seats, and the idea of a national carbon tax was scrapped — at least for the time being.
Not easy being green
The showdown highlights the political difficulties of implementing climate change policies even in a green-leaning area: British Columbia was the birthplace of Greenpeace and has long been a centre for environmental activism.
Aside from the carbon tax, battle is also being waged over the issue of independent power production. The incumbent BC Liberals have promoted licences allowing private companies to initiate small hydroelectric projects (of the kind that don’t require a dam). Some favour this plan as the most efficient way to boost renewable power production. Others object, saying companies cannot be trusted to care for the environment when profits are at stake. The NDP promises to scrap this scheme too.
What BC is going through are some of the world’s first growing pains in adapting to the realities of climate policy, says Tzeporah Berman of the climate-change advocacy group PowerUp Canada in Vancouver, British Columbia. “The debate had been all abstract until now,” says Berman. “It had been entirely possible to support a phase-out of fossil fuels and build-out in clean energy without having to face what those things mean in practice.”
Paying at the pump
British Columbia’s carbon tax is simple: all fuels are taxed based on their emissions, at C$10 per tonne of carbon dioxide equivalents. That’s 2.34¢ per litre of petrol at the pump, compared to petrol prices that ranged from 77¢ to C$1.48 per litre in British Columbia in 2008. The tax is planned to ramp up to C$30/tonne by 2012. Concurrent reductions in income tax mean that the tax is ‘revenue neutral’: the province raises no more tax revenue overall than it would without the tax.
Only a few other places in the world have a carbon tax. Sweden and Norway have perhaps the most entrenched systems, but these are more complex and are “riven with exceptions”, says Komanoff. Boulder, Colorado, also hosts a city-wide tax, but only on electricity. “British Columbia is really the world leader,” says Komanoff.
It is hard to say yet whether the British Columbia tax is succeeding in decreasing emissions, particularly because a concurrent drop in fuel prices has swamped it. Transport fuel use has increased in British Columbia, but home alterations for energy efficiency have also increased. The University of British Columbia has cited the carbon tax as one reason for upcoming changes to its natural gas power system. One economic model suggests a tax of C$200/tonne would be needed by 2020 to prompt emissions cuts large enough to avoid dangerous climate change.
Price on emissions
The BC Liberals support the development of a cap-and-trade scheme in addition to the carbon tax; the NDP favours cap-and-trade alone, citing US President Barack Obama’s interest in such a scheme. Taxation has the advantage of being fast to implement, however. The British Columbia carbon tax came into force within 5 months of being announced in February 2008; the Western Climate Initiative cap-and-trade programme, a US–Canadian scheme including California, British Columbia, and several other provinces and states, won’t come into force before 2012.
Mark Jaccard, an environmental economist at Simon Fraser University, near Vancouver, whose work informed the current carbon tax policy, says he has no particular preference for one scheme or the other. “I don’t care. You just have to get a price on emissions,” he says.
Current polls put the BC Liberals slightly ahead of the NDP. If they win, the carbon tax and independent power-production schemes will survive.
The lesson learned from British Columbia is that revenue neutrality needs to be made more clear, says Komanoff: voters have tended to notice the additional tax but not the compensating tax cuts. Cash rebates could be a better alternative, he says.
Perhaps the best thing to do is simply ensure that the world’s next carbon tax doesn’t come into effect at the same time as an oil price spike and a recession: “There’s just a lot of bad luck there,” Komanoff says.
UPDATE 10: Former BC NDP Premier Mike Harcourt has thrown support behind provincial carbon tax:
Former NDP premier Mike Harcourt has joined the movement lobbying for a carbon tax in the midst of an election campaign, arguing the tax will be part of the future despite an NDP commitment to kill it if the party wins next Tuesday.
Mr. Harcourt, the premier from 1991 to 1996, has signed an op-ed piece published today on globeandmail.com, along with such luminaries as environmentalist David Suzuki, that calls for a carbon tax and cap-and-trade system working in conjunction to spur innovation and clean-energy solutions.
“The carbon tax and cap-and-trade system should cover all of B.C.’s greenhouse gas emissions and should be enhanced over time to enable B.C. to achieve or surpass its legislated emissions target,” reads the article, also co-signed by the mayors of North Vancouver, Dawson Creek, Whistler, Kelowna and Castlegar.
But NDP Leader Carole James has made the demise of the tax a key part of her campaign platform.
The point about the tax and/or any cap and trade system covering all of BC’s GHG emissions is key. Currently The Liberal plan includes roughly 76% of emissions, while the proposed NDP plan will only cover 32%. Clearly the Liberal plan can be improved, but it is still far superior to what the NDP have proposed.
And that is precisely why myself and others have been criticizing the NDP as much as we have. They can do better.