Climate task force urges Canada’s BC to raise CO2 tax annually by $10/t from 2018

Published 01:51 on November 28, 2015  /  Last updated at 00:14 on March 7, 2016  /  Americas, Canada, Carbon Taxes  /  No Comments

British Columbia should increase its carbon tax at an annual rate of $10/tonne once it is unfrozen from its current $30 level in 2018, and the government should use some of the proceeds to cut the Canadian province’s sales tax (PST) to 6% from 7%.

British Columbia should increase its carbon tax at an annual rate of $10/tonne once it is unfrozen from its current $30 level in 2018, and the government should use some of the proceeds to cut the Canadian province’s sales tax (PST) to 6% from 7%.

Those were two of 32 recommendations published Friday in a report by BC’s Climate Leadership Team (CLT), a task force assembled by the government to help it review and build on the province’s existing climate change plan.

BC’s current revenue-neutral carbon tax, introduced in 2008, regulates fossil fuels burned for transportation, home heating, and electricity, which make up around 70% of the province’s total GHG emissions.  The revenues are channelled back to households through personal income tax reductions, and to companies via corporate tax rate cuts.

The tax started at $10/tonne and rose annually to hit $30/tonne in 2012, when it was frozen until July 2018 by current BC Premier Christy Clark over concerns about its impact on the provincial economy.

In an effort to help it meets its existing GHG reduction targets, the province has also cancelled two coal-fired power plants, required utility BC Hydro to source almost all of its electricity from clean and renewable sources, and introduced a low-carbon fuel standard for road vehicles.

But in light of this, the report noted that BC’s “have started creeping up again and are projected to continue rising.”

As such, its existing GHG reduction target of a 33% cut below 2007 levels by 2020 will be “extremely difficult to meet at this point”, and therefore the province should consider setting and focussing on hitting a new 2030 goal.

The CLT called for BC to establish a target to cut its GHG emissions by 40% below 2007 levels by 2030, and to reiterate its longer-term goal of achieving an 80% cut below the same baseline by 2050.

“The Climate Leadership Team further recommends that the annual increases in the carbon tax are reviewed in five years, however, the modelling indicates that increases in the range of $10 per tonne per year will be required through to 2050 in order to achieve BC’s 2050 targets.”

SECTORAL TARGETS

The report added that the 2030 target should be broken down into the following sectoral goals, all of which would be based on 2015 levels:

– A 30% cut in the transportation sector, equivalent to 6.3 MtCO2e
– A 30% cut in the industrial sector, equivalent to 8.4 MtCO2e
– A 50% cut in for the built environment, equivalent to 3.4 MtCo2e

The report also called for an expansion of the current tax’s coverage to apply to all GHG emission sources in BC.

“We recommend that this expansion begin in five years to continue improving data quality, and to give the sectors with significant fugitive or process emissions, such as natural gas, coal mining, and cement and metal production, time to plan and make investments to reduce their emissions where possible,” it said.

The report urged that the increased revenues be used to prevent carbon leakage by establishing “targeted and transparent mechanisms” to protect emission-intensive, trade-exposed sectors from competitors in regions without similar environmental regulations.

Those additional proceeds should also be used to eliminate PST on all electricity rates, to facilitate investments carbon-cutting technology and innovation, and to fund GHG reduction projects by local governments.

LNG

The CLT was also tasked with helping the province come up with a climate strategy that will maintain its strong economic growth while letting it push ahead with the implementation of its plan to begin exporting liquefied natural gas (LNG).

Another of its recommendations is to ensure that CO2-free electricity be used to power the province’s development of its natural gas and LNG sectors and the associated infrastructure.

The report cites evidence showing that BC’s carbon tax is working both economically and environmentally.

“Independent research has found that … fuel use in BC has dropped by 16% per capita, while it has risen 3% per capita in the rest of Canada,” it said.

“Within the same timeframe, between 2007 and 2013, BC’s real GDP grew 9.2% (more than the Canadian average).”

The CLT report is now open for a month-long consultation period. Following that, BC’s government is expected to consider the recommendations before tabling its strategy in March 2016.

OTHER RECOMMENDATIONS

The report also recommended that BC:

– Review its current carbon offset programme to determine if changes are required to support a new provincial climate change plan.
– Set a goal within five years to reduce fugitive and vented methane emissions by 40%.
– Amend its environmental assessment laws to include the social cost of carbon emissions.
– Update its Clean Energy Act to increase the target percentage of clean energy sources on the provincial power grid to 100% by 2025, up from the current 93% goal.
– Set out a path to phase out diesel generation in remote communities by 2025, replace it with low-carbon electricity sources.
– Update forestry policies to account for climate change impacts and to increase carbon sequestration.
– Develop a low-carbon transportation strategy to support the related 2030 sectoral target, and include a 20% increase in the low-carbon fuel standard while broadening it out to cover aviation.
– Develop a strategy by 2016 to support a 2030 CO2 reduction target for buildings, and include rules requiring all new public sector buildings be built using materials that sequester carbon and be powered by on-site renewable energy.
– Create a waste-to-resource strategy to cut GHGs from food and organic waste and landfills.
– Review its climate change plan at least every five years with the support of an appointed task force.

“If the majority of Canadian provinces opt for carbon pricing via emissions trading to cover greenhouse gases from large final emitters, a review should be undertaken of mechanisms to integrate a carbon tax with a cap and trade framework for the BC context,” the report added.

By Mike Szabo – mike@carbon-pulse.com

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