Now that the Carbon Tax has been implemented, and if it goes as planned, will increase annually at the rate of $5/tonne CO2e until the Carbon tax reaches $30/tonne in 2012. Is this the answer to BC’s war on climate change? What is the “answer” anyway?
BC’s Gaol - Reduce GHG emissions by 15% (33%) below 2005 (2007) level by 2020
This goal was set when BC joined the Western Climate Initiative (WCI).
The Carbon Tax is only one piece of puzzle to complete the big picture. Because it affects us directly, there has been the most noise, concerns, and confusion on this policy. The BC Government actually has developed many (too many to list) other plans/policies to acheive the GHG emissions reduction goal. Some of the highlights are:
- BC public sector be carbon neutral by 2010;
- including hospitals, schools, provincial government, BC Hydro, ..etc
- Local governments that have signed the Climate Action Charter must be carbon neutral by 2012;
- including 151 municipalities in BC as of January 14th, 2009
- BC Hydro will acquire 50 per cent of its incremental electricity needs through conservation by 2020; and
- many others!
These are not easy goals to reach! A more detailed timeline and milestones can be found on the Live Smart BC website. All these actions/initiatives are also outlined in the BC Climate Action Plan. Personally I am quite impressed with the BC Government’s comprehensive plan to reduce GHG emissions. However, even if all the actions/initiatives are implemented successfully, only 73% of the proposed emissions will be reduced… What are WE going to do for the rest of the 27%?!
I think this is an important topic because, in fact, not all GHG emission in BC is taxed! Only 70% of the total GHG emissions in BC is in the Carbon Tax system. The rest of the 30%? It should be addressed when the cap-and-trade system is set up!
Who pays Carbon Tax?
- You and I who purchase fuels used in combustion - gasoline, diesel, natural gas, heating oil, propane;
- Businesses and Industries who purchase fuels used in combustion;
- Industries that combust fuels (coal, natural gas, … etc) in their processes;
Who gains?
- Individuals who pay income tax - tax cut - reduce by 5% in 2009
- Low income families receive tax credits - $205 in 2009 (may be adjusted in future years)
- Small businesseswho pay income tax - reduce by 1%
- Corporates who pay taxes - reduce by 1%
Who is exempted?
- Combustion of biofuels;
- 5% - Emissions resulting from industrial processes such as the production of oil, gas, aluminum and cement;
- 14% - Emissions from non-energy agricultural uses (e.g. emissions from enteric fermentation, manure management, and agricultural soils) and waste (landfills);
- 11% - Fugitive emissions which cannot currently be accurately measured (e.g emissions from equipment and pipeline leaks)
BC, along with 7 US states and 3 other canadian provinces, are part of the Western Climate Initiative (WRI). A cap-and-trade system is currently being developed through WRI partners and will be implemented on January 1, 2012, as reported on the September 2008 press release. The cap-and-trade system will, as the BC Government has ‘promised’, address the rest of the 30% GHG emissions that is not currently taxed.
Frankly, it does seem like some industries got a break as the cap-and-trade system will only be implemented 3.5 years after the kick-off of the Carbon Tax! As Carbon Tax a much easier system to develop and implement, it is not surprising that the cap-and-trade system is lagging behind; although I would like to see the BC government have a policy in place that requires industries to disclose and report GHG emissions inventory ASAP and put in a “special Carbon Tax” in the interim period until the cap-and-trade system is developed.
Do you think the BC Carbon Tax is fair?
The combustion of any of the following fuel has Carbon Tax associated with it. Each fuel and its associated carbon tax for 2008 is outlined below:
- gasoline - 2.34 cents/L;
- diesel - 2.69 cents/L;
- natural gas - 49.66 cents/GJ;
- jet fuel - 2.61 cents/L;
- propane - 1.54 cents/L; and
- coal - HHV 20.77 $/tonne or LHV 17.77$/tonne.
Depending on the type of fuel, different amount of Greenhouse Gases (GHGs) is produced during combustion. In the “Climate Change Terminology”, different fuels have different emission factors (i.e. x gCO2e/L gasoline and y gCO2e/GJ Natural Gas). In Canada, Environment Canada determines emission factors and they are documented in the “National Inventory Report, Greenhouse Gas Sources and Sinks”. You may have noticed that the emission has the unit of “CO2e”, which stands for “CO2 equivalent”. This is because GHGs is more than just CO2, other GHGs (water vapor, methane, nitrous oxide, ozone, and CFCs) can also form during combustion of fuels. CO2e takes account of all GHGs.
Since we know that each tonne of CO2e will be taxed at $10 in 2008, we can determine the actual Tax that one needs to pay, which has been listed above.
OK, enough of boring definition, my point is that the Carbon Tax is not just the gas tax! In fact, as outlined in the BC Climate Action Plan (P.25-26):
- only 36%of GHG emissions in BC is from transportation (i.e. the combination of gasoline and diesel), AND
- only 39% of the transportation emission is from passenger vehicles!
This means that only 14% of the Carbon Tax is from the combination of gasoline and diesel!
In other words, 86% of the Carbon Tax is not from purchasing gas or diesel at the pump! Not bad in my opinion, what do you think?
Do you know that the BC Carbon Tax is a “revenue neutral” tax? What the heck does it mean anyway?
Simplily put, it means that all the money that individuals and businesses/industires pay on Carbon Tax is recycled back to all of us via tax reductions. The purpose of this type of incentive is to “shift tax” - charge more for bad tax (i.e. pollution/Greenhouse gas emission) and reduce good tax (i.e. income). The BC Government has actually prepared 10 case studies (Table 1.3 on P.17) to help us realize how we might all be benefited in every income category. While the information is somewhat available, it is not easy for find!!
You might ask, but someone or one of the sectors must pay more for Carbon Tax than received back from the government!
This is TRUE, because if everyone gets exactly the same they pay back from the goverment, then there is absolutely no use for this policy (and perhaps that’s why many think that revenue neutral is such a stupid idea?!). The breakdown, simpily put, is like this:
- ~64% of the Carbon Tax is paid back to individuals through tax credits (for lower income families) and tax reductions;
- 30% of the Carbon Tax is paid by the indivudials
64% for individual tax credits and income tax reductions is clearly outlined in the 2008 Budget (1,179M returned out of 1,849M total collected). From Environment Canada’s breakdown of BC’s GHG inventory in 2006 it stated at the bottom of the page that “British Columbians are directly responsible for about 30% of provincial GHG emissions, amounting to about 4.5 tonnes per person, per year.”
Well, not a bad deal as individuals in BC! Hopefully now the “revenue neutral” carbon tax makes a little bit more sense.
Majority of British Columbians are against the Carbon Tax that the Liberal government implemented in July 2008. Googling on the internet, majority of the articles are also negative about the Carbon Tax. Even my good friend told me that I won’t have any fan if I support the BC Carbon Tax.
Yes, we don’t associate well with the word ‘tax’, and the government has done an impressively poor job in explaining this policy. Even the official website (I think this is the official website anyway) is pretty, eh, lack of content to say the least. The only website dedicated for the Carbon Tax is how to spend that $100 dividant, which has of course caused a lot of ooops on it’s own. As the provincial election coming in 2009, the Carbon Tax will sure be one of the main discussion.
Amist all the articles against the Carbon Tax, I did discover two that supports the initiative published by the David Suzuki Foundation and the Pambina Insitute. They are quite reputable organizations, so I’m glad that they have commented on it.
I also found that there’s a lack of easy to understand websites that explains the Carbon Tax. I thought that perhaps understanding this policy can help us decide whether we will support the Carbon Tax or not.
In a series starting Monday February 9, I will try to asnwer the following questions:
- What the heck does it mean when the Carbon Tax is ”revenue neutral”?
- It’s CARBON tax, not gas tax!
- Who pays? Who gains? Who is exempted?
- Case Studies
- Is Carbon Tax the answer?
I welcome comments and ideas, or if you have other questions about BC’s Carbon Tax.
BC Carbon Tax | flo | 
February 13, 2009 7:37 am | 
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