Pembina Institute

Carbon taxes: solutions instead of smoke and mirrors

Matt Horne

Published in The Vancouver Sun (May 5, 2010)*

By Matt Horne, Associate Regional Director, British Columbia

"Carbon taxes killed private sector jobs in Sweden" read the headline on Aldyen Donnelly's recent column in the Vancouver Sun.

There's just one problem: while Donnelly presented an onslaught of statistics to support her argument that the tax shift led to reduced employment, none of them actually link Sweden's carbon tax to job losses.

Given the carbon tax generates a tiny percentage of the country's revenue, much more plausible explanations are the general shift away from manufacturing throughout Western Europe, a large national debt and relatively high overall taxation.

The line of reasoning she used is akin to blaming B.C.'s budget woes on its carbon tax instead of acknowledging the role of the global economic downturn.

If carbon taxes really did kill private sector jobs, you wouldn't expect to find this statement on the website of B.C.'s largest emitter, Spectra Energy: "We believe that a workable federal climate change program should . . . provide certainty about costs of compliance, preferably through a simple, efficient, revenue-neutral carbon tax."

While Spectra Energy (like many Canadians) would clearly prefer a national approach to dealing with climate change, it hardly sounds like an industry preparing for its funeral. Rather, Spectra acknowledges the need for a low-carbon economy and wants to see clear policy in place.

The alternative is allowing polluters to continue to pollute for free, with no financial incentive to employ cleaner technologies — a do-nothing strategy resulting in an upward trend in Canada's emissions for as long as we've been measuring them. Claiming that putting a price on pollution won't work doesn't give much credit to the private sector, and ignores its track record of developing solutions to environmental challenges, such as acid rain, when given the right incentives.

None of this is to say B.C. doesn't still have hard work ahead to strengthen its carbon tax. The same goes for the federal government's climate policy, except it hasn't even left the starting gate yet. The fact we have so much more work to do to deal effectively with climate change is precisely why it makes sense to learn from the many countries that have put a price on carbon.

Do any of these models from other countries offer the ideal template? Of course not — but by analyzing other jurisdictions' successes and failures and putting them in a B.C. context, we can design a fairer and more effective carbon tax. It would be applied equally to all sources of greenhouse gas pollution, at a price that's high enough to spur cleaner technologies and behaviours. A portion of the revenue would be invested in emission-reduction projects, such as public transit, and ensuring low-income families are part of the solution.

Getting all of this figured out in time to dramatically reduce emissions in the next decade — as the science shows we must, and as the provincial government has promised — won't be easy. However, the benefits of building a fair and effective carbon pricing system far outweigh the costs of doing nothing and sticking our heads in the sand.

Matt Horne is the Director of B.C. Energy Solutions at the Pembina Institute. Read the Institute's carbon tax recommendations at www.pembina.org/pub/1961


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