A carbon price for Canada?

B.C.’s carbon tax, with its six year track record, is a proven success

When Prime Minister Harper admitted in a year-end  interview that a price on carbon is something he might accept, Canadians could be forgiven for thinking “it’s about time”.

James Hansen has studied climate change for over 30 years. Over that time his alarm has grown steadily about the world his grandchildren will live in, as the accelerating climate crisis takes hold. The retired NASA climatologist has been speaking about climate change since the 1980s. He now confesses that his earlier projections, while accurate about increasing global temperatures, “failed to explore how quickly this would drive an increase in extreme weather”.

What does Hansen think can be done? A steadily rising carbon tax is one of the best ways to limit carbon pollution, Hansen says.  He points to British Columbia as an example.

B.C.’s carbon tax, with its six year track record, is a proven success.   A tax of $30 per ton of carbon emitted adds about 7 cents to a litre of gasoline.  B.C.’s emissions have declined about 9.9 per cent per capita since 2008, while the economy has grown slightly more than the Canadian average in the same period.  What’s more, the carbon tax is supported by 64% of B.C. residents,  who receive lower personal and corporate income tax rates which fully offset the tax.

A carbon tax is one of the tools that could gain support from both sides in the polarized world of federal politics. Conservatives are typically against anything that increases the size of government. B.C.’s carbon tax does not increase government revenues, and is cheap to administer.

The “revenue neutral” aspect appeals to both sides of the political spectrum. Many like the idea of a market-based tax as a way to address carbon pollution.

We can’t continue to pollute the atmosphere for free. If we don’t clean up our own garbage, our children and grandchildren will, under much more difficult conditions.

The carbon tax is more than simply an incentive to use less gasoline and other fossil fuels. It also acts to level the playing field for providers of wind, solar, and other alternative energy. Oil, gas and coal companies still receive taxpayer subsidies. However, once the market factors in a steadily increasing carbon tax, renewable energy alternatives can become steadily more economically competitive.

Interestingly, several oil company CEOs have spoken out in favour of a tax. Suncor CEO Rick George called for a carbon tax of $40/ton in 2011, while Lars Bacher, CEO of Statoil Canada, suggested a price of $50/ton. Oil company executives know the science, and they know that climate change – more droughts, floods, increasing impacts on air, water, and food – means that governments will ultimately be forced to act to reduce emissions. The oil companies would like this to be done in a way that is fair and predictable, and allows them to factor it into their business plans.

With this kind of support for a price on carbon, and mounting evidence that it works, it’s not surprising that the Prime Minister is coming around.

Blaise Salmon of Victoria is a financial advisor and volunteer with Citizens Climate Lobby.