Review: Carbon Tax, What Is It All About?

Hard to believe the weather is going to be in the high twenties later this week when today was so wet and cold. I guess this is a perfect evening to share my notes on the sustainability café event I attended Monday night. This was an event promoted under the umbrella of 30 Days of Sustainability and held at the BCIT campus in downtown Vancouver. I counted between 35 and 40 attendees at the event, not a bad turnout.

Monday's BCIT event was on the carbon tax, soon to become part of the everyday reality for all British Columbians. The tax will work its way into our daily lives in June (I heard June last night but read July 1 in an online article), and a panel of specialists came together to discuss the impact of the tax, as well as why taxation was going to give us a fighting chance to tackle climate change. The event was moderated by Kevin Washbrook from Voters Taking Action on Climate Change and each speaker was allocated 10-15 minutes to talk about their view of the carbon tax.

The first speaker was Graham Whitmarsh, Head of the Climate Action Secretariat of BC. Whitmarsh briefly identified some of the different options the government has to fight increasing emissions: regulation (regulating the volume of methane emissions from landfills), fiscal measures (the carbon tax), market measures (a cap-and-trade system), programs to support the development of green tech, and encouraging changes in behaviour (education). The key is not to limit a climate change strategy to one option, but how to use these different options in combination to achieve the greatest impact.

The carbon tax being introduced in BC is based on the amount of carbon dioxide generated by different fossil fuels. First at $10 per tonne, it will increase to $30/tonne in 2012. What it means to you and I depends on the fossil fuel. For gasoline, $10/tonne means paying 3 cents more per litre at the pump. However, instead of investing the revenue from the tax in infrastructure and public transit, the government of BC is using the carbon tax to reduce other taxes (personal, corporate). This is why the tax is called "revenue neutral". In the Q&A part of the evening, someone asked why the government wasn't investing in the public transit infrastructure to further help reduce emissions. The answer from Whitmarsh was that our public transit was already funded by revenue generated from existing taxes on gasoline (in areas receiving the transit services). Therefore, the carbon tax dollars are being handed back to British Columbians to spend as they see fit (that's the $100 refund we should each be getting in a little while). Low-income households are also slated to receive additional refunds.

Because we already know how the carbon tax will increase over the years, there's an opportunity for changes in behaviour and operations to happen over time. Some changes are already happening today: Whitmarsh has already seen a positive impact on the green tech and alternative energy industries (additional funding? more interest?).

The second speaker was James Tansey from Offsetters Climate Neutral Society. Offsetters sells carbon offsets for air and car travel, and then pools the money into local and international greening projects. Offsets are charged on the market value of carbon, which is currently around $20/tonne. Tansey explained the difference between offsets and taxation. Offsets are a form of self-taxation and the money collected is invested into sustainable projects (the sustainability of which is variable, as there are good and bad carbon offsets). The carbon tax revenue, on the other hand, can be spent on energy efficient lightbulbs or a tank of gas once its back in the hands of BC residents.

Tansey, however, saw the carbon tax as an education opportunity, since it will impact all British Columbians. At what point will is start changing behaviour still remains to be determined (especially for individuals). Large polluters and corporations are already showing signs of modifying their energy strategy. This is not surprising considering the financial impact of the carbon tax on large energy consumers. For example, UBC will have to pay $600,000 extra on gas bills once the carbon tax is introduced. Greenhouse operators in BC estimate that the carbon tax will reduce their profits by 30% if operations are not revisited to include more energy-efficient equipment.

The final speaker of the evening was Jotham Peters from M.K. Jaccard & Associates. Peters, who is an environmental economist, spoke about the sources of carbon dioxide in BC: combustion of fossil fuels (75% of all emissions) and process-related greenhouse gas emissions (for example: cement manufacturing, aluminium smelting, and natural gas extraction). Peters then explained the three reasons why BC decided to introduce a carbon tax. First, subsidies and information programs of the past have not helped contain GHG emissions in Canada (quite the contrary, as our emissions have steadily increased over the years). Second, regulations cannot target all possible sources of GHG emissions and introduce the potential for loopholes and stifling overhead in the additional paperwork. Finally, the carbon tax, economically, is the most efficient and most fair option.

And how would one sell the carbon tax to skeptics? Simply by linking local problems to climate change. One example that keeps on coming back in this province is the pine beetle infestation, a serious issue for the forestry industry. Also, by starting the tax at a low level ($10/tonne instead of the market value of $20/tonne), you give people time to make changes.

Could there possibly be negative impact to the carbon tax? All three speakers initially answered "no". They then revisited this answer to "possibly" and gave the example of an increase in electricity demand as people switch to plug-in hybrids and electrical cars. If BC Hydro is not ready to handle the increase in demand, it will have to import electricity that could be generated using a coal plant, for example. The net impact on GHG emissions could be negative, but it would be a short term negative impact. What about the impact on the public? Again, all three speakers seem to agree that this impact would be very minor, but that the educational opportunity would be fantastic.

I did not stay for the last part of the event, which was meant to be a one-on-one between the speakers and the members of the audience. Overall, I was happy with the format of the presentation, and left feeling better informed on the topic.