Monday, October 6, 2014

Do Carbon Taxes Work?

The Climate Crusader looks into the results of a carbon tax in British Columbia, Canada.

I live in British Columbia, the westernmost province of Canada. Much like the US, Canada's west coast is associated with left-leaning liberal hippies. Here in Vancouver you'll find an abundance of vegan bakeries, food trucks, craft breweries and community gardens. This city was the birthplace of Greenpeace, and it is the home of David Suzuki. We're far from perfect, but it's fair to say that the number of environmentalists per capita who live here is at least a little higher than average.

Here in British Columbia we've had a carbon tax since July 1, 2008. The rates started out low but increased to their maximum in 2012. When it was introduced prices for gas, heating and so on rose. There was also a lot of public debate. Some people argued that it would create an unreasonable burden on businesses, who would pass those costs along to families. Some people argued that it wasn't significant enough to change behaviour. Others argued for different systems.

Six years on, though, you don't hear too much about it. We've gotten used to paying it - and I'm happy to report that I haven't noticed that my cost of living has skyrocketed as a result. But did it work? Has it made a difference? I recently went online to find out. Here are some highlights from a 2012 progress report:
  • Sales of gasoline, diesel, natural gas, coal and oil decreased by more than the Canadian average after introducing the tax.
  • This decrease happened at the same time as the population grew by five per cent, which was also above the Canadian average. 
  • The province's GDP growth was above the Canadian average, including during the global recession. And the Canadian economy performed better during the recession than the US economy.
  • There was a 48% increase in sales in the clean technology sector.
  • The tax was designed to be revenue neutral, so increases in the carbon tax were offset by decreases in other taxes.
Something else that is worth noting is that British Columbia has a large resource sector, including coal. We mine billions of dollars in coal every year in this province. This is not a place where we all grow organic kale for a living.

Given all of that, it was with interest that I read an article in The New York Times about President Obama's failed bid for a carbon tax in the US. Senator Mitch McConnell is quoted as saying:
President Obama’s war on coal won’t have any meaningful impact on global carbon emissions. What it will do is ship American jobs overseas, raise the cost of living substantially for middle and working-class families and throw thousands more Kentuckians out of work.
Of course, the experience in one place is not necessarily going to be repeated in other places. However, it is a good starting point. Given what's happened here where I live, I can say that the carbon tax fear-mongering hasn't played out. The cost of living hasn't skyrocketed. People in the resource sector haven't been thrown out of work. And carbon emissions have gone down. It seems that carbon taxes can work, and that the downsides can be mitigated.

It is my fervent hope that the world does put a price on carbon. It's past time to act. We're all in this together, and we need to pull together to create real change. And based on what's happened here, real change can happen. That's the good part. Now the only question is whether or not we'll rise to the challenge.


Green Bean said...

It is so interesting to hear what life is like under a carbon tax. I am not surprised that none of the nightmare scenarios turned true.

Here in California, I know people whose water agencies imposed mandatory rationing with fines for overuse. Low and behold, the folks I knew cut their water bill by 75%. Months after the rationing was lifted, they are still using 50% less than a year ago.

People may not like them but taxes work!

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