Pembina’s ideas for improving B.C.’s carbon tax

The B.C. government should strengthen its carbon tax in the 2010 budget, according to a set of recommendations released by the Pembina Institute today. If adopted, the recommendations will ensure more investment, innovation and job creation in low-carbon businesses, while achieving greater greenhouse gas emissions reductions, says the Institute.

“B.C. has shown leadership in moving toward a low-carbon economy by implementing North America’s most ambitious carbon tax, but it’s important to continue to strengthen the tax so it is as fair and effective as possible,” says Matt Horne, director of B.C. Energy Solutions for Pembina.

“Broadening the carbon tax’s coverage and continuing to increase protection for low-income families should be the top priorities for 2010,” Horne says.

When asked to comment on Pembina’s recommendations, Dr. Mark Jaccard, a professor at Simon Fraser University and lead policy analyst with the Global Energy Assessment and the IPCC, said, “These recommendations are crucial if B.C. is to continue to advance its economically efficient and highly effective climate policies.”

Recommendation: Broaden the carbon tax to cover 80 per cent of B.C.’s greenhouse gas emissions by including process (i.e. not from combustion) emissions from the aluminum, lime, cement and natural gas sectors. The change would increase coverage by seven per cent.

Why: Applying the carbon tax more broadly will spur emissions reductions from more sectors of the economy, while eliminating the concern that the tax is not applied equally to industrial emitters.

Recommendation: Continue to increase protection for low-income families.

Why: By expanding low-income tax credits and/or targeting emissions reduction efforts toward low-income families, concerns that the carbon tax is adversely impacting low-income families will be alleviated.

Recommendation: Increase carbon tax above $30 per tonne after 2012.

Why: To equitably contribute to a global effort to avoid dangerous climate change, carbon prices in Canada need to reach $200 per tonne by 2020. To be approaching those levels, B.C.’s carbon tax needs to increase by between $15 and $30 per tonne per year from 2013 to 2020.

Recommendation: Invest a portion of carbon tax revenues in projects that will reduce emissions.

Why: By implementing emissions reductions projects unlikely to happen without public investment (such as public transit infrastructure), public support for the carbon tax will increase.