BC Carbon Tax A Failed Experiment: Report

Our planet’s climate crisis is intensifying, but many in industry, government and even the advocacy community have turned to market mechanisms to alleviate climate change instead of regulating the pollutants that cause it. These free-market approaches rely on putting a “price” on climate change-inducing emissions — such as imposing taxes on carbon — as an indirect method to reduce these pollutants.

The Canadian province of British Columbia implemented a carbon tax on certain fossil fuels in July of 2008. Some experts and pricing proponents are using the British Columbia carbon tax example to promote carbon taxes and other market mechanisms as a way to purportedly reduce greenhouse gas emissions and address our climate problem.1 Unfortunately for these free-market proponents, the real-world record fails to demonstrate that British Columbia’s carbon tax reduced carbon emissions, fossil fuel consumption or vehicle travel. Most of the modest and short-term reductions in emissions seem to be related primarily to the 2008 global recession, not to the carbon tax. More recently, British Columbia’s emissions have resumed their rise. This report examines the British Columbia program and finds that this type of pricing approach is not going to save the planet or safeguard our communities. A more straightforward approach of regulating emissions would be significantly more effective at curbing climate change. Introduction We are in the midst of a global pollution problem that threatens our environment, public health and future generations. Emissions of greenhouse gases, especially carbon dioxide (CO2 ) and methane (CH4 ), into the atmosphere are driving serious climatic changes that will threaten coastal communities, water resources and agricultural productivity, and have many other significant ecological impacts. Human activity, primarily in the form of the burning of fossil fuels, is propelling the release of CO2 emissions into the atmosphere at a rate that is 10 times faster than at any time in the last 66 million years.2 Preventing the worst effects of climate change and avoiding a 1.5 degree Celsius temperature rise — which means not emitting more than 400 gigatonnes of CO2 starting in 2011 — requires driving greenhouse gas emissions essentially to zero.3 The most prudent way to do this is to transition to a 100 percent clean energy system and zero emissions by 2035.4 Many policies, from strict regulatory controls to marketbased approaches (including carbon credit trading schemes, carbon taxes and other carbon pricing mechanisms) have been proposed to counter this impending crisis.5 In the 1970s, the United States successfully stopped and reduced many forms of air pollution with the Clean Air Act by establishing limits on industrial pollutants, and effectively regulating polluting industries.6 The sensible approach to climate change should be based on this empirically demonstrated model. Unfortunately, governments, including the United States, currently lack the political will to take the concrete steps necessary to successfully address and curtail greenhouse gas emissions. Rather than setting mandatory emissions limits and requiring polluters to meet these in order to achieve greenhouse gas emission reductions, experts — and their recommendations to policy makers — are shying away from effective regulations on industry.7 Instead, there has been a major shift, driven by industry and economists, to rely on the marketplace to control pollution.8 Many frequently hold out British Columbia as an example of a successful carbon tax program that significantly reduced CO2 emissions.9 The data do not support these claims. British Columbia achieved only minimal and short-term province-wide greenhouse gas emission reductions immediately after the tax was implemented, and it is highly questionable whether the carbon tax even caused these declines. The carbon tax only went into effect in the second half of 2008, and while there was a decline in emissions from 2008 to 2009, it is impossible to attribute that one-year drop to a tax that was in place for only half of 2008 — especially since taxed greenhouse gas emissions rose by a total of 4.3 percent between 2009 (the first full year that the tax was in place) and 2014. British Columbia’s carbon tax failed to reach the reduction targets necessary to ensure a sustainable climate, demonstrating that carbon taxes are not a viable policy solution to climate change.

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