Towards an effective and fair carbon reduction strategy
The latest science on global warming shows we must rapidly slash carbon emissions, or face catastrophic impacts on our civilization by the end of the century. We are already seeing the precursors with a 10-year drought in Australia, repeated flood events and the loss of interior forests here in B.C. Initiating the shift to a low-carbon economy and lifestyles is the responsibility of our generation. Eventually we will have to find a way to remove carbon from the atmosphere to ensure climatic stability but first we must stop making the problem worse. A hard cap on carbon emissions, within an equitable and motivational framework, is required if British Columbia is to do our part to avoid global climate disaster.
How can we effectively eliminate all greenhouse gas emissions both fairly and effectively? ‘Cap and Dividend’ is a relatively simple and transparent model that uses existing mechanisms rather than inventing new administrative bodies. It is already in the works in the United States, where it is before Congress as the Cap and Dividend Act of 2009.
Clearly, we must have a cap on carbon emissions or we will not be able to limit global warming to the average two degrees Celsius that scientists say is necessary to avoid a climate calamity. A cap will cover 100 per cent of emissions, either directly or by flow-through pricing, unlike BC’s current carbon tax which covers about 70 per cent. Once the cap is applied, carbon permits are sold at the four points of entry of carbon into the economy: oil wells, gas wells, coal mines and the border protecting our industries from unfair, uncapped competition. The collected revenue is then distributed fairly to all citizens.
The ‘Cap and Dividend’ model protects low-income earners from price increases and rewards the carbon-thrifty with additional income. It takes money from carbon polluters and users, and redistributes it equitably for climate-friendly initiatives such as home retrofits, consumption of locally-produced food and low-impact and public transportation choices. The structure also brings certainty to emission levels in a way we could never count on taxes to accomplish.
British Columbia has chosen taxing carbon as its method to stimulate behavioural changes necessary to slice greenhouse gas emissions. The tax is modest, such that recent price fluctuations in gasoline have exceeded its value by a factor of 20. Even at the projected maximum of $30/tonne we cannot expect the kind of results that are needed to meet legislated goals of a 33 per cent emissions reduction by 2020 and an 80 per cent cut by 2050 — much less the critical goal of reaching zero emissions by the end of the century. Taxes beyond the $30 mark would be politically thorny, increasingly inequitable and therefore unlikely.
While the very presence of the carbon tax raises consumer awareness and promotes some positive change in energy usage, a speedy transformation to a low-carbon economy must be multi-pronged and include infrastructure renewal, a comprehensive transportation policy and personal financial ability (or available assistance) to invest in green options. Relying solely on an imprecise and unpredictable market mechanism like the carbon tax to reach critical targets within distinct time-frames runs the risk of falling short–at a time when the planetary stakes have never been higher.
B.C.’s carbon tax has been examined closely by the Canadian Centre for Policy Alternatives (CCPA) The CCPA concludes that the tax in its current form is inequitable and discriminates against people who want to make the right choices both for themselves and for the planet but are struggling financially. British Columbians could turn against the essential transition to low-carbon lifestyles simply because they cannot afford to shrink their carbon footprints. The CCPA found that by year three of the carbon tax, BC’s highest 20 per cent of income earners will incur a net benefit from corresponding income tax cuts whether or not they reduce their carbon consumption, while everyone else has a net loss.
The irony is that higher income earners often have a hefty carbon footprint through lifestyles that include frequent and far-flung travel, larger vehicles like gas-slurping SUVs, bigger houses, and multiple dwellings. They have little incentive to forego what they can easily afford. Without fundamental change, the present carbon tax regime makes it harder for the majority of British Columbians to contribute to inspired solutions such as retrofitting their homes, buying locally-produced organic food or leaving their car at home in favour of improved public transportation.
A logical application of at least some of the province¹s carbon tax revenue, whether through low interest loans or grants, would be to assist many British Columbians to make those climate-friendly changes. In this vein, Metro Vancouver mayors have asked the province to free up to $300 million in annual carbon tax revenue to help pay for regional transportation. The enormous technical challenge of reconfiguring B.C.’s infrastructure will not be cheap and will not all be financed privately or by industry. The money stream generated by the current ‘revenue-neutral’ carbon tax cannot be applied, as it logically should, to low-interest retrofit loans, grants or public transit investment (including fare reductions which would encourage greater use). Taxes from gasoline are already used to build roads and bridges. It is also both sensible and necessary to use public money to finance measures and infrastructure changes which encourage climatic stabilization.
‘Cap and Dividend’ clearly has a place in Canada, and what better province than B.C. to guide the way? B.C. has already led by recognizing the need to manage our carbon. Now we can become a global leader in promoting a ‘Cap and Dividend’ solution that acknowledges the need for urgent action based on the most recent science, ensures BC¹s carbon reduction targets will be met and equitably helps all B.C. residents erase our collective carbon footprint.
George Heyman is Executive Director of Sierra Club BC. Dr. Colin Campbell is Sierra Club BC’s Science Advisor.