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BC's climate policy can't leave poor behind: CCPA

If British Columbia is serious about reducing its greenhouse gas emissions, it needs to find a way to help low-income households cope with higher energy prices.

That's the focus of a new report published today by the Canadian Centre for Policy Alternatives (CCPA), warning that the costs of the province's shift towards greener, more expensive, sources of energy, will fall disproportionately on the poor and working class.

"This is a framework that allows us to make the transition to zero-emission housing, while doing so in a way that protects low- to moderate-income households from being unfairly hit by those policy changes," explains Marc Lee, economist at the CCPA and one of the report's three authors, along with Eugene Kung and Jason Owen.

According to the report, in 2009, the poorest fifth of B.C.'s households spent an average of 5 per cent of their total income on energy, while the top fifth spent only 1.5 per cent. With renters and low-income homeowners generally unable to pay for energy-saving renovations, rising energy prices will only widen this disparity, the report claims.

To tackle the projected rise in "energy poverty," the report presents seven recommendations for the B.C. government. The proposals include income assistance and electricity bill caps for low-income households and a more progressive BC Hydro billing system whereby low energy users are charged at a significantly lower rate than more energy-intensive households.

Though high-energy households are almost always high-income, raising prices on the bigger users is not just about fairness and equity, says Dr. Mark Jaccard, professor of sustainable energy at SFU.

"There are economic efficiency arguments that support this," he says. "The real cost, what we call the marginal cost, of providing new energy supplies is higher than the highest step in the rate."

In other words, though it costs society more and more to produce each additional unit of energy, the rates paid by households do not reflect that increase. This provides a de facto subsidy to electricity-hogs who aren't paying the full cost of what they use.

The CPPA report also calls for government financing of energy efficiency retrofits for homes.

"With energy efficiency, even without subsidies on the table, there are a lot of cost-effective investments that could be made, but which still aren't being made. Maybe that's because there are renters, or because of up-front costs, or because of lack of information over the long-term," says Lee. "This proposal is about trying to break down some of these barriers."

According to the CCPA's estimates, adopting the proposals to retrofit the province's aging housing stock would cost $220 million annually over a 10 year period -- over $2 billion in total.

To put this figure in perspective, Premier Christy Clark's recently announced jobs plan is estimated to cost $300 million.

But Marc Lee does not shy away from the seemingly large price-tag of his plan.

"Two-hundred and twenty million dollars a year out a total provincial budget of $40 billion is not a huge amount of money," says Lee. "The carbon tax is a fairly obvious revenue source to fund the proposal and if the government is serious about actually creating jobs, then this is one way to do it."

The report estimates that the proposals, if enacted, would directly lead to the creation of roughly 12,000 jobs.

While Jaccard could not comment on the job figures estimate, he supported the thrust of the policy plan.

"That kind of spending is the best way to stimulate your economy," says Jaccard. "I don't always agree with these guys at the CCPA, but with this report, I think they've got it all just about right."

Ben Christopher reports for The Tyee.

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