Environment

Uncertain impact for BC’s carbon tax

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In an effort to help cut greenhouse gas pollution, Britsh Columbia has adopted North America’s largest carbon tax. But as the World’s Jason Margolis reports, the tax may still be too small to be making a difference. (flickr photo: courtesy of wburris)

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MARCO WERMAN:  I’m Marco Werman, this is The World.  Fossil fuels, like oil and coal, are the biggest sources of global warming pollution.  But governments around the world are having a hard time finding ways to wean their economies off the stuff.  Here in the U.S., Congress has been unable to agree on a new energy strategy, so states have been left to chart their own course.  It’s the same in Canada where provinces are experimenting with various approaches to the problem.  A year and a half ago British Columbia adopted North America’s largest carbon tax.  The World’s Jason Margolis has this report on how it’s working.

JASON MARGOLIS:  Jennifer Davies advertises her Hair Garden Salon in Victoria B.C. as an eco-friendly salon.  I was curious what that meant so I booked an appointment.  So the eco-friendly part of this haircut is coming?   Thus far it’s pretty standard.  I haven’t minimized my carbon footprint yet.  The eco-friendly part came when she washed my hair with organic shampoo.

JENNIFER DAVIES:  So as you can tell it’s not sudsing up because when you don’t have sulfate, you don’t get a sudsing effect.

MARGOLIS: Davies has other green tricks up her sleeve.  But truth be told I came to her shop to get more than a guilt-free haircut.  I wanted to hear how B.C.’s new carbon tax has impact her business.  When I asked her about it, the talkative stylist suddenly tensed up.

DAVIES: I find that, what am I trying to say, I’m focusing on your hair right now.

MARGOLIS: Davies seemed embarrassed that a green business person like herself just didn’t know much about the carbon tax.  But she’s not alone.  Most ordinary people I met in British Columbia didn’t know much about it either, which was surprising since during the last election here the carbon tax was the issue.  Even in Canada there’s no dirtier word than tax.

ALISON SHAW:  People were irate.  People were making their election choices based on whether they were in support of the carbon tax or not.

MARGOLIS: That’s Alison Shaw of the University of British Columbia’s Sauder School of Business.  This being the northwest, we met at a Vancouver coffee shop to talk about her research on the effectiveness of British Columbia’s carbon tax.  Shaw says she likes this approach to cutting carbon pollution because it’s easy to implement and it’s transparent.

SHAW: The carbon tax does a really good job at sending predictable price signals to business.

MARGOLIS: That price signal in B.C. is 3.6 cents on a liter of gas for now.  Or about 14 cents a gallon.  Straightforward.  Simple.  And palatable to many voters because the tax is revenue neutral.

SHAW: Which means that they are paying more at the pumps as consumers, but actually that revenue that is generated is coming back in tax breaks and tax incentives.

MARGOLIS: With one the government taketh, with the other it giveth right back.  That’s because the idea of the carbon tax wasn’t to raise revenue, but to change consumer and business behavior.  But for a tax like that to work, it has to pack some punch.  For example, tax British Columbia’s tobacco tax.  Every pack of cigarettes carries a tax of nearly $4.00.  That’ll curb your habit pretty quickly.  The carbon tax, on the other hand, adds only a small percentage bump the cost of polluting fuels like gasoline, natural gas and coal.

LISA DUNN:  It really doesn’t have a ripple on what we do.  It doesn’t create any kind of disincentive or incentive.

MARGOLIS: Lisa Dunn is with The Islands Trust, a local government that encompasses 450 island and 25,000 people off the coast of Vancouver.  The island have a very green ethic and Dunn supports the carbon tax.  In fact, she supports a higher tax.  She says when the carbon tax took effect in 2008 nobody much notice.

DUNN: Unfortunately, I guess the prices of fuel were skyrocketing at the time anyway, so it got basically buried in what was already being a 20% or so increase in fuel at the tank.  So it really wasn’t that visible.

MARGOLIS: Put another way, the carbon tax isn’t costing people enough to make them change their behavior.  So it may not be having its desired impact.

JOSEPH PALLANT:  I think as a good hip hop artist would say, cash rules everything around me.

MARGOLIS: That’s Joseph Pallant, he runs a small company called Carbon Project Solutions.  We also met in a coffee shop.  He favors a different approach to cutting carbon, the so-called cap and trade system that Europe adopted a few years ago. It’s more complicated than a carbon tax, but Pallant likes it because it sets a clear emissions limit for large polluters.

PALLANT:  I think that you need to push the cap and trade first for the large carbon emitters and then you put a carbon tax to sort of sweep up other elements of the economy that aren’t getting caught by that.

MARGOLIS: And before long, British Columbia will have both. The province has joined a regional cap and trade market of 11 U.S. states and Canadian provinces.  It begins in two years.  At that point, B.C. will become a laboratory to see whether a carbon tax or a cap and trade system is better at limiting greenhouse gases.  Or, as some argue, perhaps they’ll learn that they need both.  For The World, I’m Jason Margolis, Vancouver, British Columbia.

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