The carbon tax in British Columbia was introduced in 2008 to curb greenhouse gas emissions. 15 years since its implementation, has the province seen a reduction in emissions? An analysis of British Columbia’s Emissions Inventory and literature paints a picture of the results.
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What Is a Carbon Tax and How Does It Work?
The first of its kind to be introduced in North America, the carbon tax in British Columbia was implemented in 2008 by Premier Gordon Campbell to reduce greenhouse gas (GHG) emissions at a starting price of CA$10 per tonne of emissions.
Presently, the rate has increased to $50 CAD per tonne of emissions and is scheduled to keep increasing each year. Both businesses and individuals are responsible for paying tax on GHG emissions, which applies to purchased and used fuels and combustibles burned to produce energy or heat, including liquid fuels (i.e., gasoline), gaseous fuels (i.e., propane), soil fuels (i.e., coal), and combustibles (i.e., peat).
For example, a person will be required to pay a tax when they fuel their gasoline engine at 11.05 cents/litre and use propane to heat their home at 10.06 cents/litre.
To put this into perspective, an average vehicle tank holds about 55 litres of gasoline, meaning it would cost the driver approximately $6.08 per fill in carbon tax. Similarly, to heat a 140-square-metre home using a propane furnace requires approximately 210 litres of propane each month, resulting in $21.13/month in carbon tax.
To ease this tax on low- and middle-income households, the province initiated a Climate Action Tax Credit to reimburse households on the carbon tax. Such households are reimbursed a Climate Action Tax credit at $193.50 per adult and $56.50 per child (as of the increase July 1, 2022).
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Is the Carbon Tax Reducing Emissions In British Columbia?
Based on the Provincial Inventory of Greenhouse Gas Emissions, net emissions in 2008 were 65.8 million tonnes of carbon dioxide equivalent (MtCO2e) compared to 64.6 MtCO2e in 2020. This has resulted in nearly a 2% decrease over 12 years since the tax was first implemented. But is this really enough?
In 2013, a study compared BC’s per capita consumption of taxable fuels to the rest of Canada between 2008 and 2013. The study found that BC’s taxable fuels had declined by 19% compared to the rest of Canada while keeping its economic standing comparable to the country. Although the carbon tax is changing behaviour and encouraging green initiatives, there are still research gaps to determine if this tax is mitigating climate change and if its leading to emissions to be leaked elsewhere.
According to a 2015 study conducted by the University of Ottawa and Duke University, there has been cause for concern with research gaps since the carbon tax has been implemented. First, they had noted that there is a research deficiency to determine whether the carbon tax is mitigating climate change. For example, BC’s forestry industry has suffered greatly from climate change from the mountain pine beetle that feeds on tree tissues to forest fires, costing the province an average of $316.9 million per year.
But because of data deficiencies, it is hard to determine whether the carbon tax is actually mitigating these actions. Moreover, there is not enough research to determine whether the carbon tax has resulted in leakage of GHGs, “where observed emissions reductions in BC are associated with emissions increase elsewhere” – in other words, where there is unintentional emissions elsewhere due to an economic sector being sourced elsewhere. For example, GHG emissions could be seeing a reduction in heavy industry (i.e., mining and smelting) due to resources being outsourced to other provinces or countries.
Overall, the carbon tax is a step in the right direction for effectively reducing GHG emissions. However, a higher price on emissions would further reduce emissions and thus curb climate change. Additionally, in depth research needs to be conducted to quantify exactly how much the carbon tax is mitigating climate change in BC and determine if leakage is occurring as a result of the carbon tax.
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