In a letter addressed to Premier Christy Clark, who governs the province of British Columbia, more than 150 companies said they back a plan to increase the carbon tax by $10 — about $7.70 U.S. — per metric ton a year starting in July 2018, an idea the government-sponsored Climate Leadership Team unveiled earlier this year.
Since 2007 British Columbia has been setting greenhouse gas reduction targets based on findings of the Intergovernmental Panel on Climate Change (IPCC), the world’s most respected authority on the subject. Four years after introducing the first carbon tax in North America in 2008, British Columbia froze the tax rates at 2012 levels to allow other provinces to catch up. However, that freeze could be lifted under a new Climate Leadership Plan that could be approved this spring.
The proposed plan includes myriad recommendations, like reducing emissions in the so-called built environment, industry, and transportation sectors by 40 percent compared to 2007 levels. Yet among the 32 recommendations, raising the carbon tax could be the most salient to the public as it affects everyone. It also brings direct monetary benefits, since the carbon tax is revenue neutral — meaning every dollar generated goes back to the public through reductions in other taxes. So the extra money that British Columbians pay for gas, for instance, is offset by a tax refund elsewhere.
Although it’s received some criticism, the carbon tax has been widely deemed a success by the government, nonprofits, and academics. Studies have found that the carbon tax reduced fuel usage by at least 16 percent, and that emissions have fallen 3.5 times faster per capita than the rest of the country. The tax has also created negligible impacts on the economy. In fact, British Columbia’s economic growth rebounded at the same rate as the rest of the country following the recession.
Not all has been rosy, though: the Economist reports some industries say they've lost a third of their market share to U.S. and Asian imports, and farmers facing competition from non-carbon-taxed jurisdictions say they have been dissatisfied. That's despite studies finding that the agricultural sector didn't suffer a downturn after the tax.
A carbon tax increase could then cause discomfort among some, but supporters say green energy and tech businesses will thrive, helping a swift transition to a clean energy economy. About a third of signatories include renewable energy and clean technology companies, as well as sustainable biochemical developers -- industries that would likely see a quick benefit from the increase. However, the rest are grocery stores, pharmacies, breweries, construction companies and other small to medium sized businesses, said Matt Horne, B.C. associate director for the Pembina Institute, which spearheaded the letter. In an interview with ThinkProgress, Horne said most of the public and virtually all politicians are supportive of the carbon tax, though they may disagree on policy details.
Meanwhile, the U.S. lacks the political support to establish a national carbon tax, yet it gives millions in subsidies to the coal industry and other fossil fuel companies. Not even the embattled Clean Power Plan, which is a national policy to reduce carbon emissions, has been able to operate in the United States -- instead, it now waits for its day in court.
So far the United States has cap-and-trade programs, but a carbon tax is an anathema to some politicians, even though established academics have long said that such policy would be a simple way to encourage efficiency and decrease fossil fuel use and emissions with little long-term effects on the public. Moreover, an Organisation for Economic Cooperation and Development report published this month said that countries with more stringent environmental policies remain competitive in comparison to more polluting nations, thanks in part to innovation.
Residents in some states are, however, interested in giving carbon tax a chance. In Vermont, a coalition comprising the state's top environmental organizations started a campaign supporting a pollution tax. In Rhode Island, a group called Energize Rhode Island is following the same trend, and in Washington State, a group called Carbon Washington has an initiative headed to the November ballot. If Initiative 732 is approved, Washington would be the first state in the U.S. to have a carbon tax. Whether that will happen remains to be seen, as groups like the Washington State Labor Council already oppose the initiative.
Author: Alejandro Davila Fragoso