Motivating the Rich to Stop Wasting

When the price of gasoline in the U.S. hit $4.00 per gallon in 2008, U.S. Department of Transportation stats showed that driving dropped to levels not seen since World War II. The reduction was mostly accomplished by increased carpooling as well as people moving closer to their jobs or finding new jobs closer to home. When the price of gasoline dropped, people went back to their old habits. The response in Canada was similar.

Even with the carbon tax, the overall price of gasoline in B.C. today is lower than it was in 2008. People have gone back to their fuel-wasting habits.

If there was an all-party consensus to maintain a carbon tax that was constantly adjusted to keep the price at the pump at 2008 levels, with refundable credits to low and medium income people adequate to more than offset extra costs, consumption would be reduced to 2008 levels and the extra money would be available for social programs instead of going to oil company shareholders. This is exactly how it has worked in Europe for years.

Ideally, carbon taxes would only apply to higher income people who use far more than their fair share of energy to begin with and can easily afford to mitigate increased costs by purchasing more fuel efficient vehicles and super-insulating their homes to the point that they can be heated with very little energy. But it's not practical to charge high income people more for fuel and charge low to mid income people less. The only practical way of accomplishing this is to charge everyone more for energy and issue credits to low to mid income users. If that approach is rejected, then we are stuck with the current situation where rich people who use way more than their fair share of energy are actually being heavily subsidized by society because the external impact of that energy wastage is being paid for with extremely regressive taxes such as medical insurance premiums.

Ronald Reagan's trickledown theories were mostly drivel. But trickledown often does work in the area of energy efficiency. If rich people are motivated to pay extra for new fuel efficient cars, those cars will eventually be available on the second hand market at a price that is affordable to lower income people. When the Toyota Prius hit the Canadian market, they sold for about $30k new. With high enough fuel prices, such a vehicle is financially justifiable and easily affordable for a $150,000 per year stockbroker, union boss, PR flack, or politician driving 40,000 km per year. If they sell it for $15k after 5 years and 200,000 km, they have got their money's worth out of it and a moderate income buyer of this used vehicle can expect to get another couple of hundred thousand km out of it before spending any significant amount on repairs. If a low income person is willing to buy a 10 year old Prius with 200,000 km and a few dings and scratches, they can get it for under $3k. Same concept with super-insulated houses.

Public Transit Doesn't Recognize Value of Time

Public transit will always be inefficient, a waste of time. Carpooling and part-time cabs are far more convenient and reliable, they cost taxpayers nothing, and they are practical in small towns. As Tieleman has admitted, many people feel the billions of dollars wasted on public transit would be better invested in our crumbling medical system. Carpooling increased much faster than transit use between 1996 and 2006 despite all the absurd restrictions imposed on carpooling vs billions subsidizing public transit.
http://www12.statcan.ca/english/census06/analysis/pow/5_increase.cfm

I once dated an assistant bank manager who took public transit to work every day. The money she saved was used to buy deluxe Club Med vacations several times a year. Public transit subsidies wound up buying fancy vacations for an assistant bank manager.

There would be no need for public transit if government bureaucrats would simply get out of the way, stop limiting the number of cab licenses issued, stop interfering with shared cabs and hailed cabs, and stop interfering with cabbies who want to vastly increase efficiency by picking up passengers on return trips across municipal boundaries instead of coming back empty.

"The Origins of Taxicab Limitation in Vancouver City" is a fascinating academic study on the history of taxi cab monopolies in Vancouver:
http://ojs.library.ubc.ca/index.php/bcstudies/article/view/1087/1131

From the study:

"no other economic activity over which civic control has been so complete, so durable, and so manifestly contrary to the interests of the using public."

"Those who do use taxis — visitors, the disabled, those on expense accounts, and those temporarily without other means of transport — are a disparate lot without voice or presence at City Hall."

"Committee chairman H. G. T. Perry (Liberal) was not persuaded [of the need to limit the number of cab licenses issued]: 'It seems to me such a move would create a monopoly. Eventually some corporation will gain control of the business.' CCF members Harold Winch and Lyle Telford opposed the proposal on the same grounds, while Conservative R. L. Maitland favoured the idea."

"...the only aspects which should be of concern to civic authorities were the safety of vehicles and the character of drivers. Anyone with a safe vehicle and a fit character should be allowed entry. In time the number of cabs would reach an optimum level on its own."

"Canadian taxi wars, 1925-1950":
http://www.thefreelibrary.com/Canadian+taxi+wars,+1925-1950.-a030556140

"...by May 1929, as cabs, behaving like common carriers, cruised along the street railway routes offering to carry up to five passengers to any destination in the city for a shared fare of 25 cents."

"By draining off some of the excess passengers at rush-hour, the jitney [shared] cabs would also have allowed municipal transit companies to get by with fewer drivers and vehicles, thus cutting their costs as well."

Well, duh Bill............................

..........the Carbon Tax hasn't worked because it was never a carbon tax, rather it was a punitive gas tax. Real Carbon Taxes sees tax monies spent on transit projects to reduce carbon emissions.

The mainstream media have been willingly duped on this issue and continue the myth.

Until our politicians and very incompetent academics start preaching the truth about BC's Carbon Tax, the region will see more punitive taxes masquerading ad "good taxes", when they are in effect general taxes.

In BC Carbon Taxes aren't; P-3 aren't and corrupt politicians and MSN are.

@realisticman

I think your economist needs to look at his numbers again...I was suspicious of that Globe article when I read it.

doesn't change consumption behavior

The claim is that consumption taxes are meant to modify consumer’s behaviour.

Back around the year 2000 I seem to recall that the price at the pumps spiked some 40-50 cents per litre.

This did not change any of the driving habits for British Columbians. Gasoline consumption or lack thereof did not change.

How 7 cents a litre Carbon tax is supposed to modify consumer’s behaviour is beyond me but we all witnessed Suzuki and Berman take their thirty pieces of silver and jump on board.

For cycling commuter;

There is a reason those second hand Prius are cheap. The cost of a replacement battery is in the five figures…..

Grumpy is right on the mark.

It was always intended to be a cash cow for a bunch of debt ridden liberals. Nothing more, nothing less. In that sense it worked just fine for them. That's why it is claimed a success by some eastern economists.

It's a Punitive Gas Tax............. for SOME !

"The Carbon Tax hasn't worked because it was never a carbon tax, rather it was a punitive gas tax."

APPARENTLY, some people in BC fuel up with "special" gas and diesel. They are EXEMPT for the "so-called" Carbon Tax. And yet I can't find any of those "special pumps" that dispense this type of fuel !
Trouble is, I'm betting that this special fuel pukes out just as much emission as my vehicle.

What about the environment and the low income?

BC Liberals get those without a carbon foot print to pay the biggest price. If you are disabled on assistance you have to use it as income for the entire month of the year government gives clients no assistance for. Instead government administers support payments four times a year disguised as a rebate which it is not. BC low income are plagued with higher prices everywhere they turn, and the inflation factor and the HST and carbon tax off their purchases leaves BC's low income in a major dilemma with no where to turn.
http://rabble.ca/blogs/bloggers/policynote/2011/07/bc-about-drop-new-carbon-bomb

Blacktop Politics Drives Gas Consumption

Sure Bill, yes money from the carbon tax should fund public transit, including a passenger rail and highway bus strategy for the whole province. (Yes people in rural areas want transit service too, particularly along the Highway of Tears)

But the bigger problem is that for decades governments have been telling us to take transit and drive less, but spending more and more on freeways and road expansion. Build more urban roads and they just fill up and more tar sands oil gets burned.

Right now the provincial government is demolishing the 115 year old Glenrose Cannery in Delta to make way for the $1.5 billion South Fraser Perimeter Road freeway. The next step is to pave over the archeological site next to it that is older than the Pyramids of Egypt - http://stopthepave.org/historic-cannery-coming-down

basic math

"I once dated an assistant bank manager who took public transit to work every day. The money she saved was used to buy deluxe Club Med vacations several times a year. Public transit subsidies wound up buying fancy vacations for an assistant bank manager."

Cycling Commuter, I'd like to know where your date shopped for her club med vacations. The transit tax credit is 15%. A 3 zone pass is $151, so over a year that would give a total credit of 0.15*151*12, or $271. Even assuming a marginal tax rate of 50%, that leaves $135. Is there a club med in surrey I don't know about?

Hopefully your cycling skills are better than your math skills.

Public Transit DOES work!

Cycling Commuter

"Public transit will always be inefficient, a waste of time."

This statement can only come from a mouth of a person who lived its entire life in North America. In this part of the continent people really have no clue what REAL PUBLIC TRANSPORT is really all about.

My suggestion to you is go to Europe to a similar size of a city such as Vancouver. You'll quickly realize that going anywhere in the city will be faster by public transit than by car.

Public transport works as it can be seen in many European countries. And it is ahead of North America by about 15 years!

Public transport in North America is gross and disgusting to say the least. Unless you work in downtown or UBC the majority of people who take public transport here, and in many major cities in Canada are the poor and the students. Just look at the ridership and you'll see what I'm talking about.

Subsidies go to the oil companies here where as in Europe subsidies go to public transit.

When gas prices here will be $4.00/ltr - like it is in Europe - maybe people will demand alternative transportation to commute to work. Until then nothing will change here.

The time that most people waste commuting to work can be done in public transit in Europe for less than half!
So while an average North American sits and idles in their cars for 1 hour to work and 1 hour back home (on a distance that is about 40km or less) a European will spend sitting on a train for 30 minutes or less.

So who is using and wasting more energy? North Americans! And they still insist that public transit doesn't work. Well, no planning and no money isn't going to create efficient public transport system. Duh!

@realisticman

So how exactly have Richmond Plywood Corporation's grenhouse gas emissions been reduced? They're burning (wood?) waste instead of natural gas, with just as high, if not higher, GHG emissions. The tax just encouraged them to change the fuel that they burn (illustrating quite clearly how this is a fuel tax, not a "carbon" tax). This leads into my next point...

...that domestic sales of refined petroleum products, which I assume is what is meant in the above quote by "per-capita fuel usage", is totally irrelevant. The whole point of the "carbon" tax was to reduce BC's GHG total emissions, which includes far more that just emissions from refined petroleum products (like for example burning wood waste). The BC GHG inventory for 2009 is out soon. We'll see then whether emissions have risen or fallen.

As for the Provincial GDP, other factors like the Olympics and the housing bubble, surely had an impact.

How is domestic per capita

How is domestic per capita fuel use irrelevant? What is more relevant?

Total GHG emissions? Maybe, but then you're just looking too broadly at a complex picture, you need to account for population growth for one thing, and most likely economic growth too.

Absolute emissions increases and reductions are the result of a complex system including structural changes in your economy, the weather (which influences residential fuel use and electricity production), capital stock retirements, etc.

What the eye to look at is, especially with a low carbon price like BC's is reductions from a BAU baseline if you didn't have a carbon tax.

@jimmy

Under various conventions from yes even the IPCC burning biomass for energy does not count as a GHG emission because the carbon in the wood was already in the carbon cycle.

There are some emissions from land use changes but those protocols are still not well understood and are generally not reported on in emissions inventories.

So yes while still problematic, biomass energy is not considered a source of anthropogenic GHG emissions. If you have a problem with that then take up to a couple layers higher than the carbon tax.

@Ronald Pagan

Total emissions. I wrote total emissions in my post.

Right!

No, not maybe. Definitely.

It's not my picture, it's the former Premier's. He made a grandiose promise back in 2007 to cut total GHG emssions 33% by 2020.

From an environmental standpoint, total GHG emssions is the only quantity that matters. But if you prefer to talk about per-capita emissions, that's fine too. I was simply trying to use the same yardstick to measure progress as the BC government. My point is simply that not all emissions come from burning refined fuels, and I don't think Elgie's analysis includes this. I don't know if BC's emissions are increasing currently (they did in 2008, during a recession no less, the last year for which data is available), but I think it's too early to say whether total emissions (or per-capita emissions) are rising or falling, and if the carbon tax has had the desired effect.

I'll take your word for it, but my point regarding Elgie's comparisons still holds.

Well Jimmy, you're likely to

Well Jimmy, you're likely to be disappointed. Nobody expects the carbon tax to reduce total emissions so early. First the carbon price isn't high enough, second population growth and economic growth (which wasn't that bad in the recession and is now practically fully rebounded) will press that figure up.

So yes I agree that total emissions is what matters in the end, but showing per capita reductions relative to the rest of Canada is a pretty good indication that the tax is working to its stated objectives of reducing emissions. Comparing to a target baseline will always leave you wanting. Comparing to a baseline of what you would have done without a tax will show reductions, which also matter.

Third, to get the big reductions you need to wait for an appropriate time to account for capital stock retirement. When people need a new car, or industry needs a new furnace or kiln. This stuff is all staggered but you can't expect the carbon price to make a pulp mill buy a new kiln if it just bought one 5 years ago, you'll need to wait another 15 years until it gets a new one. That or you jack the carbon price way up.

And you're right now all emissions come from burning fuels, but those are the only emissions that are taxed so I don't know why you're blaming the carbon tax for emissions it isn't reducing that it doesn't even tax. Don't blame the instrument there. And Elgie doesn't say refined fuels, he says fuels. Fuels count as NG, and RPPs and coal/coke. Pretty sure he accounts for those. In eitherway, it's a way better analysis that Bill T's classic shoddy pinhole view of gasoline sales. (an embarrassment Bill)

You have left out something...the hidden taxation!

Where's the outrage?

"Public institutions such as schools and hospitals spent $18.2 million last year buying carbon offsets to compensate for greenhouse gas emissions -money that subsidized energy-efficiency programs of big industry rather than being reinvested in energy projects within the public sector.

Among the private corporations that benefited from such offset expenditures: Lafarge cement; forest companies Canfor, Interfor and TimberWest; natural gas company Encana; and Kruger Products, a manufacturer of toilet paper and related products. They earned the right to sell offsets to the public sector based on energy-saving initiatives.

The $18.2-million expenditure is the result of a provincial policy requiring public sector facilities to be carbon neutral starting in 2010. The program is designed to encourage energy-efficiency initiatives, forcing institutions to buy carbon offsets for their emissions through the Pacific Carbon Trust, a Crown corporation.

B.C.'s public sector produced 814,149 tonnes of emissions in 2010, 84,367 of which were exempt from offsetting, including emissions from schools and transit buses.

While public institutions say they support steps to improve energy efficiency, they assert that their money should be pumped back into their own facilities.

Lee Gavel, chief facilities officer for Simon Fraser University, said the $444,452 SFU spent on carbon offsets last year could have been used for research on fuel-efficient technologies or capital projects to reduce carbon emissions.

"We agree with the intent of the regulations to drive, through economic means, efforts toward greenhouse gas reduction," he said, noting SFU recently received a $4.7-million grant to produce heat and hot water from construction wood waste. "But we'd appreciate the opportunity to reinvest those funds to projects on the ground."

The University of B.C. topped the list of public facilities, spending $1.5 million on offsets.

Nancy Knight, UBC's associate vice-president of campus and community planning, said she can only guess that the sheer size of the post-secondary institution is to blame for its position on the list. The campus has 14 million square feet of academic floor space and 8,500 students living on site, she noted."
more:
http://www.vancouversun.com/health/Public+sector+carbon+offsets+subsidize+businesses/5070414/story.html

@Ronald Pagan

David Ebner and Shawn McCarthy do. And it kind of seems like you do too, judging from some of your comments.

Good.

No. Nobody has shown this (per-capita reductions in emissions relative to the rest of Canada). That's the whole point. Emissions data past 2008 isn't even available.

I'm didn't blame anything on the carbon tax. That's just asinine.

He's counting fuel use instead of emissions. Does his analysis include emissions from natural gas production? Cement production? It might, but as I pointed out above 2009 emission data for BC is not available quite yet, so I'd be very surprised. Of course, there's no linked paper, so it's impossible to tell.

Gordo wanted it, we got it

Gordo wanted it, we got it