Under-reported analysis shows carbon tax pays off for B.C.September 21, 2012
What has B.C.’s carbon tax done for — or to — the province’s environment and, more significantly for its critics, to or for our economy since its introduction in 2008?
The data are still preliminary, but the direction seems clear. The short answer is the impact on the environment is dramatic and positive, and — although there are unquestionably losers as well as winners — the overall economic impact is pretty much a wash.
This was the conclusion of an under-reported analysis released in the summer by Sustainable Prosperity, an Ottawa-based think-tank. Its founder and chairman, Stewart Elgie, who teaches economics and law at the University of Ottawa, elaborated at a public forum Thursday at Simon Fraser University.
Elgie’s group looked at what has happened to B.C.’s energy use in relation to the rest of Canada’s since the carbon tax was introduced — a measure that’s more telling than mere consumption because it isn’t skewed by things like the economic slowdown or the surge in cross-border shopping, which affect most provinces, not just ours.
It turns out our emissions are, by this measure, 16 per cent below other provinces'.
“That’s a big change,” Elgie said. “I don’t think all of that is due to the carbon tax. But almost certainly a meaningful part of it is.
“And it’s moving in the right direction, and it’s moving at a meaningful pace.”
As for the economy, our position has improved slightly vis-à-vis the rest of Canada.
You can’t credit the carbon tax entirely for that either, he said, “but you can certainly say there has been no negative impact.”
Mikael Skou Anderson of the European Environmental Agency told the forum his studies of the economic impact of carbon taxes on countries that have had them for two decades or so show, over time, small economic gains.
And they show that even for the most vulnerable industries — things like cement production, which uses a lot of fuel and can find only a limited number of efficiencies — the net loss caused by shifts to carbon taxes creates a hit of no more than two per cent on profits.
Meanwhile, Elgie said, other sectors do better — in B.C., most notably green-tech industries.
“So this (carbon tax) is good policy,” he said. “B.C. now has the lowest fuel use in all of Canada. It has the lowest corporate and personal income tax thanks to the carbon tax. It has the fastest growing green-tech sector in Canada.”
As well, “Over four years, taxpayers have got back more than $500 million in tax cuts than they’ve paid in carbon taxes. From the finance minister’s point of view, that might not be such a great thing, but it has actually been taxpayer-positive.”
The last provincial budget, Premier Christy Clark’s first, ended what had been a steady progression in the carbon tax rate, which now stands at $30 per tonne of emissions, and ordered a review of what the future policy should be.
Elgie was pessimistic that the province would continue to raise this tax in small steps, which were — by law — accompanied by matching reductions in other taxes.
And he cautioned against two really bad alternatives — one of which the province has already adopted, at least temporarily, when it exempted greenhouse operators from paying the tax.
What such exemptions do is “create people who chronically have this problem. There is no incentive to become more energy efficient.
“So do the opposite. Give every one of them a lump-sum payment — maybe equivalent to the average carbon efficiency of the industry. But they still pay the tax.”
This way, companies that improve their efficiency get to keep the money and pay less tax — a strong incentive to use less fuel.
Even worse than exempting big emitters who have effective lobbyists, he said, would be to reduce or eliminate the tax altogether.
The result would be “All that capital investment and individual investment people have made over the last five years on the assumption of a carbon price would be stranded and wasted.
“Whether you’re a homeowner who insulated your house or invested in a fuel-efficient vehicle, or a company that put in new technology, all of a sudden the things that reward you for that investment would be gone.”
BY: Don Cayo