Canadian Energy Research Institute finds BC carbon tax ineffective

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As a tool for lowering greenhouse gas emissions, B.C.’s carbon tax is a dud, according to a new study by the Canadian Energy Research Institute.

The study compared B.C.’s carbon tax and Alberta’s tax on large emitters to the European emissions trading scheme and Quebec’s cap-and-trade agreement with California.

The study concluded that the B.C. carbon tax was beneficial for the economy, but had little impact on emissions, compared to cap-and-trade in Quebec and Europe.

“BC carbon tax policy boosted economic activity but had no effect on emissions,” the report concludes. “Since the objective of regulatory policy is to reduce emissions, our results suggest that the carbon tax policy in British Columbia failed to achieve its goal.

“In fact, oil prices have been found to have a bigger effect on emissions in B.C. than carbon tax.”

The study likewise found Alberta’s policy, which taxes large emitters, didn’t result in emissions reductions.

The CERI study conflicts with others that found that, while B.C. emissions have gone up since the carbon tax was introduced, it’s because the economy grew so much. Without the tax, emissions in B.C. would have been much higher, some sustainable energy experts argue.

“Empirical and simulation models suggest that the tax has reduced emissions in the province by between 5% and 15% since being implemented,” a study published by Brian Murray and Nicholas Rivers in Energy Policy in 2015 concluded.

Chris Bataille, a Simon Fraser University expert in energy and climate policy and associate researcher for the Institute for Sustainable Development and International Relations, said the B.C. carbon tax would be more effective in reducing emissions if they were higher and applied more broadly.

Currently, the tax in B.C. is $40 per tonne. It was supposed to have gone to $45 in April, but the increase was deferred, due to the impact of the COVID-19 pandemic on the economy.

“We’re not suggesting that B.C. should scrap the carbon tax,” said Dinara Millington, CERI’s vice-president.

It would be more effective in curbing emissions if it were higher, she said – $40 to $80 per tonne by 2020 and $50 to $100 per tonne by 2030 – and did not provide some exemptions for the metallurgical coal, natural gas and LNG sectors in B.C.

While those sectors do pay carbon taxes, Millington said their allowances for how much they can emit are higher than for other sectors.

“Certain sectors have preferential treatment,” she said.