Lessons from B.C.’s carbon tax experience

theglobeandmail.com
May 20, 2016
By Jeffrey Simpson

British Columbia was the first jurisdiction in North America to impose a carbon tax.

The 2008 Carbon Tax Act set the levy at $10 a tonne of carbon emissions on all fossil fuel uses. The tax was increased by $5 a tonne each year until it reached $30 a tonne in 2012. Then, the provincial government of Premier Christy Clark froze the tax for five years.

Carbon emissions initially fell, although it’s difficult to know whether the decline happened because people changed behaviour in response to the tax, or because of the financial recession of 2008. After some years of decline, emissions began to inch up again in 2012 and 2013.

It’s now obvious that British Columbia will fail to meet the greenhouse gas-reduction target it set when the carbon tax was introduced - a 33-per-cent drop by 2020 from 2007 levels. There are many reasons, including population growth. Another is freezing the tax.

The original designers assumed the tax would keep rising by $5 a tonne until it reached something much higher than the current $30. Indeed, a group established to advise the government on next steps - the Climate Leadership Team - suggests a $10-a-tonne increase every year until 2050 - which would bring the price of carbon to more than $300 a tonne, a figure beyond the realm of the wildest political dreamer.

With Ontario about to launch a madcap scheme to lower carbon emissions, and other governments scrambling to figure out what to do, B.C.’s very modest progress, despite being a “first-mover” with a carbon tax, illustrates how tackling climate change qualifies as what today is called a “wicked problem.”

A wicked problem does not mean anything evil, just a problem that is very, very complicated and quite difficult to solve. Wicked problems usually have four elements that contribute to enormous complexity: complete or contradictory knowledge; a large economic burden; links to many other problems; many people involved with widely different opinions.

So it is with climate change. Those super-keen on action (people who lead environmental organizations, for example) always propose “solutions” that are far too simplistic. They have the certainty of the convinced and, as such, airbrush complexity, a sadly common way of approaching public problems.

Conversely, those who deny the existence of climate change, or who want to do as little as possible, airbrush the risks of doing very little.

The majority of the population, understandably, is somewhere in the middle, as shown in a recent poll by Greg Lyle, president of Innovative Research of Toronto and Vancouver.

British Columbians have lived with a carbon tax - with all the revenues recycled into lower personal and corporate taxes - since 2008.

Now, Mr. Lyle says, his data shows that “they can live with the status quo, but they resist paying more.” A majority of unaligned voters and supporters of the governing Liberals oppose a higher tax; New Democratic Party supporters are divided. Given those attitudes, Mr. Lyle concludes: “It will be hard for a government within a year of an election to be seen to be doing anything that would result in higher prices.”

That’s an arresting conclusion for a province that is assumed to be quite green in its political leanings. Green voices there certainly are - loud, organized and persistent. The rest of the population is much more hesitant and conflicted.

What about across Canada? Here, too, conflicts abound. About 80 per cent of people are “concerned” about climate change, a big leap from a decade ago. Only a shrinking and small minority deny the existence of the challenge. But when asked to rank issues in importance, Innovation Research, based on its April online survey of 2,383 Canadians, found climate change came seventh (6 per cent), while the top matters of concern were jobs and economic growth (23 per cent) and health care (17 per cent).

These numbers throw up two cautionary messages.

First, a core of Canadians wants urgent action against climate change; a bigger group wants something done, but not if it means higher prices for them.

Also, the best way to pitch climate change is to argue that action in the form of regulations, subsidies, spending and higher taxes will be good for the economy, a tough sell for a lot of Canadians, including in British Columbia where carbon taxing began.