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Budget 2013: Support the Carbon Tax!

As BCSEA's Director of Policy, I'm asking you to let government know your ideas on how the 2013 budget can support sustainable energy:
 
The Select Standing Committee on Finance and Government Services is now accepting public input on the upcoming provincial budget for 2013.
 
BCSEA encourages you to give your thoughts by fax, internet submission or email: http://www.leg.bc.ca/budgetconsultations/submissions.asp. Just go to the website and follow the instructions.
 
Support the carbon tax and/or oppose subsidies to shale gas and LNG developments: It is really important for government to hear voices from all over BC in support of the carbon tax. (And against subsidies to shale gas and LNG.) Please feel free to use some or all of the points presented below.

All inputs are due by Thursday, 18 October 2012.

Could you send a copy of your submission to info@bcsea.org ? We'd like to know what our members are thinking.

Carbon tax points:

  • The carbon tax should increase annually on an announced schedule by at least $5 per year (the current rate) or perhaps by $10 per year. This gives a clear signal of direction, allowing British Columbians and BC businesses to plan ahead.
  • The carbon tax should be broadened to capture as many non-combustion greenhouse gas emissions as can be reliably measured. That means emissions from aluminum production, mineral and lime production, cement production, and methane venting from natural gas production. Together, these cause about four megatonnes of carbon dioxide equivalent per year, eight percent of BC’s total emissions.
  • Allocation of revenues: There is merit in the principle of revenue neutrality, which was applied when the tax was introduced. Government should also consider the alternative of allocating at least some of the carbon tax revenues toward climate change solutions such as energy efficiency, transit improvements and bike lanes. This would more clearly demonstrate government’s leadership on climate and engage British Columbians more directly. Extending the tax to cover non-combustion emissions would generate $123 million per year that could be applied to climate solutions.
  • Low income people should be protected from undue hardship by ensuring that the carbon tax credit keeps pace with the tax itself.
  • Finally, there should be no loopholes in the carbon tax. Keep it simple, transparent and fair.

Point against subsidies to shale gas and liquefied natural gas developments:

  • The 2013 budget should exclude any subsidies to shale gas or liquefied natural gas developments, either with taxpayer dollars or with BC Hydro ratepayer dollars (that is, through making BC Hydro’s lower-cost heritage resources available to gas developers).

Backgrounder:

Carbon tax arguments:

Putting a price on carbon is widely regarded by economists and business leaders as necessary and important to encourage a shift from fossil fuel use toward sustainable energy alternatives. Carbon pricing is supported by the National Round Table on the Environment and the Economy [1] and by the Canadian Council of Chief Executives.[2]

The Business Council of BC supports the carbon tax in principle, although it has reservations about its execution.  [3]
 
Without a price signal on carbon, people are encouraged to disregard the climate change consequences of fossil fuel use. With a price signal that is graduated and predictable, people and businesses can plan alternative strategies and start to address the long-term sustainability of their energy use.

This need not cause undue pain. Sweden has had a carbon tax since 1992. Its economy has grown by 44 percent while its greenhouse gas emissions have fallen by almost ten percent. Carbon pricing and/or cap-and-trade systems have been or are being implemented in a score of countries around the world, including China.  [4]  

There are many complaints about the carbon tax, but the bottom line is that the people of British Columbia want to be leaders, not laggards, in the challenge of addressing climate change. We don’t want to stand by, with our hands in our pockets, while the biggest crisis facing humanity unfolds around us.  

Our polling shows that British Columbians support the carbon tax. They don’t think it hurts the economy, and they would like to see it extended.  [5]

Seventeen hundred British Columbians wrote letters to the Minister of Finance for the carbon tax review this summer, asking that the tax be increased and broadened, and that monies from the tax be put into a 'Better Future Fund' to support climate solutions. [6]

The Government of BC [7] has looked at BC’s carbon tax and its effects, as have researchers at the University of Ottawa. [8] They find that, since the tax’s implementation in 2008, fossil fuel consumption in BC has declined while BC’s economy has increased. The group, Sustainable Prosperity, reports that BC’s economy has outperformed the economy in the rest of Canada during this time, suggesting that the carbon tax has not been harmful. [9]  

BCSEA has heard claims of economic harm from the tax, including to greenhouse growers and cement manufacturers. We take these seriously because sustainability requires economic well-being. But we must be careful not to prejudge that the carbon tax is the problem, or that it should be undermined or removed.  

Government must analyze and judge carefully any calls for relief. If analysis shows that a business is hurt by a tax, government may decide that the public interest justifies a special remedy. For example, one-time payments can be made to help a business adjust to new circumstances. Or there may be non-monetary solutions. We should also remember that the carbon tax was already accompanied by a large offsetting reduction in corporate taxes, and granting additional exemptions will undermine the purpose of the tax, while shifting costs onto other taxpayers.  

It has been suggested that support for the carbon tax is an urban, southern BC phenomenon and that rural, northern British Columbians oppose the tax. BCSEA does not see that. During the carbon tax review, supportive letters from the public came from all over BC. We should not underestimate peoples’ desire to be part of the solution.

The City of Dawson Creek, in its submission to the carbon tax review, says:
"every jurisdiction needs to do its fair share to reduce greenhouse gas emissions. The carbon tax is one tool in B.C.’s toolbox that will allow B.C. to achieve its climate action objectives, while still maintaining a strong economy. The City of Dawson Creek has been supportive of B.C.’s carbon tax since its inception, and we have been proactive in finding ways to reduce our own emissions." [10]

Arguments against subsidies to shale gas and liquefied natural gas developments:

There has been much recent discussion about shale gas developments and developing a liquefied natural gas industry around Kitimat to serve foreign markets.

BCSEA is deeply concerned about these plans. They would greatly increase BC’s greenhouse gas emissions, contributing to global climate change and making it difficult or impossible to meet our legislated greenhouse gas reduction goals. Our economic planning and development should be coordinated with plans to reduce greenhouse gas emissions, not opposed to them. Prosperity without the health of global climate system is no prosperity at all.
 
Government claims of reducing greenhouse gas emissions through LNG exports are not credible. For example, Stephenson, Doukas and Shaw, in Greenwashing Gas, argue:
 
"questions remain about whether LNG produced from unconventional gas can bridge to a sustainable energy supply, or will instead commit jurisdictions to technical lock-in of emissions-intensive energy infrastructure." [page 455]. [11]

BCSEA also questions the economic benefits of the developments to BC. There is a stampede of LNG proposals in Kitimat and of LNG proposals around the world. We are told that we are in a footrace to get our gas to market while prices are favourable. But China, an intended client, is developing domestic shale gas resources. The situation is a recipe for client countries and fossil fuel developers to stimulate over-investment in production, driving prices down. Producing countries may end up producing, even at unfavourable prices, just to manage their debts.
 

The situation argues for caution, not haste. If the resource is developed at all - and BCSEA does not assume it should be - there should be a thorough assessment of the long-term costs, benefits and risks. At a minimum, the people of BC should be reliably shown how they will not be put at risk for failed investments if the market becomes unfavourable.
 
And costs should not be shuffled onto BC Hydro’s customers. They already face high rate increases to pay for necessary upgrades to the existing hydro-electric infrastructure. Additional demand for LNG power needs would force BC Hydro to acquire more generation at today’s higher costs, further increasing costs to BC Hydro’s existing industrial, commercial and residential customers.
 
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Footnotes:

[1] Achieving 2050: A Carbon Pricing Policy for Canada, National Round Table on the Environment and the Economy, 2009. http://nrtee-trnee.ca/climate/achieving-2050-a-carbon-pricing-policy-for-canada-report/achieving-2050-research

[2] Framing an Energy Strategy for Canada: Submission to the Council of the Federation, Canadian Council of Chief Executives, July 2012  (see page 10). http://www.ceocouncil.ca/wp-content/uploads/2012/07/Framing-An-Energy-Strategy-for-Canada-FINAL-July-20122.pdf

[3] Submission on the Provincial Carbon Tax, Business Council of BC, September 2012. http://www.bcbc.com/submissions-presentations/2012/submission-bcbcs-submission-to-the-provincial-carbon-tax-review 

[4] Making Progress on B.C.’s Climate Action Plan, 2012 http://www.env.gov.bc.ca/cas/pdfs/2012-Progress-to-Targets.pdf

[5] See for example polling reported by the Institute Pembina: http://www.pembina.org/pub/2233

[6] http://betterfuturefund.ca/

[7] Making Progress on B.C.’s Climate Action Plan, 2012. http://www.env.gov.bc.ca/cas/pdfs/2012-Progress-to-Targets.pdf

[8] Carbon Tax Salience and Gasoline Demand. Nicholas Rivers and Brandon Schaufele, University of Ottawa. July 2012 (draft paper).

www.ie.uottawa.ca/article251-Carbon-Tax-Salience-and-Gasoline-Demand

[9] British Columbia’s Carbon Tax Shift: The first four years. Sustainable Prosperity. June 2012. www.sustainableprosperity.ca/article2864

[10] City of Dawson Creek’s Submission to the Carbon Tax Review, August 2012. https://dawsoncreek.civicweb.net/FileStorage/F827A16ABDF94371AADF290122F2AE48-12-193%20Report%20to%20Council-Carbon%20tax%20review.pdf

[11] Greenwashing gas: Might a ‘transition fuel’ label legitimize carbon-intensive natural gas development?, Stephenson, Doukas and Shaw, Energy Policy 46 (2012). http://econpapers.repec.org/article/eeeenepol/v_3a46_3ay_3a2012_3ai_3ac_3ap_3a452-459.htm