Can BC’s Carbon Tax Be Saved? Should It Be?

Despite an NDP campaign promise to get rid of British Columbia’s carbon tax if the federal government no longer requires it, the tax won’t disappear quickly. Or possibly at all.

While some advocates argue the re-elected NDP should reverse itself and keep the price on carbon, other past supporters accept it may be time for it to go.

“There are many factors at play in regards to the carbon tax, some within our control and some outside of our control, so all of that needs to play out in due time,” Finance Minister Brenda Bailey said shortly after being sworn in on Nov. 18.

“I can tell you this is a government that cares very deeply about both the economy and also the environment, so there will be additional balancing acts coming forward,” she said. Bailey acknowledged it would be a challenge to make up the lost revenue if the tax is killed.

The government expects to collect $2.6 billion from the carbon tax this year, an amount tied to spending on rebates to consumers and on transportation and other climate action.

Premier David Eby promised early in the campaign that if federal rules change, he would get rid of the carbon tax that applies to consumers, though the province would continue to make big polluters pay.

It was a move that took the issue out of discussion in the election, where the main opposition was from the Conservative Party of BC, whose leader, John Rustad, has argued climate change is not a crisis and promised to end the B.C. carbon tax regardless of whether federal rules change.

One person who would like to see the NDP reverse its position and save the carbon tax is Thomas Pedersen, former director of the Pacific Institute for Climate Solutions and the author of the recently released book The Carbon Tax Question: Clarifying Canada’s Most Consequential Policy Debate.

He said he feels “despair” over the threat to the carbon tax and blames both provincial and federal politicians for failing to communicate effectively about the tax and remind people that almost everyone gets more back in tax rebates than they pay.

The tax showed the world “that fair, redistributive, broad-spectrum carbon pricing could be done and done well, without economic harm,” Pedersen wrote. “It remains a template for the world. Let us not turn our backs on that success now.”

Already climate change is costing people trillions of dollars in damages as weather gets more extreme and insurance prices rise to cover the losses, he said.

According to the World Meteorological Organization, 2024 is on track to be the hottest year on record.

Another carbon tax supporter is Andrew Weaver, a climate science professor at the University of Victoria and a former leader of the BC Greens. “Obviously I do think it should be saved and can be saved,” he said. “The question is will it be saved.”

Weaver acknowledged that pushing back against the axe-the-tax narrative in the election campaign would have been difficult. “People were angry in British Columbia,” he said. “People view it as punitive instead of what it was supposed to be, which is nudging you in a direction that is low-carbon.”

Still, it was disappointing that neither Eby nor federal NDP Leader Jagmeet Singh tried.

“The NDP, to be blunt, cannot be trusted on the climate file,” Weaver said.

Weaver supported Conservative candidate Stephen Andrew in the Oak Bay-Gordon Head constituency where he lives and that he represented as MLA from 2013 to 2020.

But he says he did not endorse the Conservatives more generally, despite being supportive of Rustad on social media.

Over the last six months, Weaver spoke to Rustad many times and found him willing to engage and modify his views. “He was talking to the wrong people,” Weaver said. “You don’t advance public policy by calling people out. You advance public policy by calling people in.”

Weaver was critical of the broader environmental community for not engaging more with the Conservatives, allowing the NDP to take its support for granted and failing to support the BC Greens when they in fact champion the policies most environmentalists want.

The party he once led campaigned saying the carbon tax should be fixed to make it fair and to show how it could improve people’s lives.

“You advance the goals of the environmental community, but they won’t back you,” said Weaver, adding he found they could not be relied on to be consistent in their positions either. “They just move on to shout about the next thing.”

For a time, B.C.’s carbon tax was a flagship policy championed by many environmental advocates. B.C. was the first province in Canada to adopt a carbon tax when the then BC Liberal government announced it in 2008, predating the federal price on carbon by more than a decade.

Before the latest campaign, the B.C. carbon tax had survived four provincial elections, including one in 2009 when then NDP leader Carole James made “axe the tax” a central part of the party’s pitch to voters. In the last three it had been a non-issue, with the two main parties supporting it in principle, even if they differed on some of the details.

In early September, when Eby announced the NDP’s willingness to get rid of the consumer carbon tax, he said the consensus in the province had collapsed, in large part due to poor federal decisions, as many people struggle with affordability.

The amounts people are required to pay have gone up too quickly, and the federal government made a mistake by exempting certain products and not treating all provinces equally, he said. Last year Ottawa introduced an exemption for three years on home heating oil, a fuel mainly used in the Atlantic provinces.

The NDP’s willingness to end the carbon tax got a muted reaction, including from people who had advocated for it in the past.

For Tzeporah Berman, an environmentalist who backed the B.C. carbon tax when it was introduced, the limited response to its possible demise was understandable. Berman is now the international program director at Stand.earth and chair of the Fossil Fuels Non-Proliferation Treaty Initiative.

Fifteen years ago, B.C.’s consumer carbon tax was world leading, Berman said. “It did prove to be effective as a way of reducing emissions broadly across the economy in a way that was fair, as long as the adjustments were made to support low-income households.”

There are, however, other proven ways to reduce emissions that can be more popular than a tax, she said. “If I was running for office today, I would probably not bring back the tax; I would put in place regulations to do emissions reductions that are even stronger than what the tax would have.”

Policies supporting zero-emission buildings and vehicles and requiring the ramping down of emissions from the oil and gas industry can all be popular and effective, said Berman. And they would not be as easy a target for opposition parties as the carbon tax, she said.

Still, Berman said she has been sorry to see the failure of political leaders to make the case for the consumer carbon tax and to watch as they’ve given ground “to climate deniers in the oil industry and opposition parties and let them take control and define the conversation.”

It’s a question of leadership and framing the issue, she said.

“In some ways, losing ground with the public on the need for ambitious climate policy is a bigger loss than this one policy,” Berman said. “This is not a fight about whether or not to defend this one policy, it’s a fight for our lives and it’s ultimately a fight for political space and public awareness and support for the greatest challenge humanity has ever faced.”

Even leaders who believe in climate change have played into “the fear mongering around price and scarcity that makes us feel continually dependent on fossil fuels,” she said.

The same dynamic is present in the support of Prime Minister Justin Trudeau and former Alberta premier Rachel Notley for new pipelines, Berman said. “They’re ceding space to the existing conversation that defines fossil fuels as progress and defines anything that taxes pollution as a problem. It’s actually not a problem. It actually in the long term will make life more affordable and safer for the public, and they should be saying that.”

Instead, their positions and Eby’s accept the framing the fossil fuel industry has been designing for 30 years to convince people they are dependent on their products and infrastructure, she said.

“By ceding ground and just backpedalling and constantly weakening climate policy, they’re saying to the public, ‘Maybe it’s not a climate emergency.’ And then they’re wondering why they don’t have the support to put in place the hard stuff.”

Still, the choice in B.C.’s election was such that it would have made no sense to come out hard against the NDP’s reversal on the carbon tax.

“It was one of those moments,” Berman said. “The alternative was a clear climate denier. So what are you going to do?”

At the same time, she and other environmental advocates no longer saw the carbon tax as essential. “Yes, it is an effective policy, but we also know there are a lot of jurisdictions around the world who are having significant success at reducing emissions and transforming their economies toward renewable energy and electrification and they don’t have a carbon tax.”

As for the Greens, Berman said the party did have the best climate platform, leader Sonia Furstenau deserved support and the party’s MLAs had done great work as a watchdog in the legislature.

But they weren’t going to win, she said.

“They weren’t going to form government and it was very clear we were either going to have an NDP government or a Conservative government, and I think we had a choice to make.”

Katya Rhodes, an associate professor in the University of Victoria’s school of public administration and an economist focused on climate policy, said she wasn’t surprised the NDP decided not to defend the carbon tax.

Many are feeling the effects of rising prices, and the NDP needed to show some empathy, she said. “It was a good move to say, ‘We hear you.’”

Nor do people believe politicians who tell them carbon taxes and rebates will leave them better off overall, said Rhodes, even though it’s true lower-income households come out ahead since they tend to drive less and live in smaller houses while receiving larger rebates.

“It’s a good policy for them,” she said, but added that wasn’t communicated clearly. “There is low trust in government in general.”

From 2016 to 2019 Rhodes provided economic analysis and advice to the provincial government’s Climate Action Secretariat.

Getting rid of the carbon tax would create a hole in B.C.’s planned reductions of greenhouse gas emissions and make it tougher to hit its targets, she said.

In 2021 the B.C. government released a Roadmap to 2030 that built on the earlier CleanBC plan to show how it would meet the legislated goal of a 40 per cent drop below 2007 levels by 2030.

About 10 per cent of the planned emissions reduction was to come from increasing the price on carbon pollution, but it was unclear how much of that would be from industrial carbon pricing and how much from taxing consumers.

Already the 2030 target is in doubt due to population growth and failure to implement some of the policies in the plan, Rhodes said. “I don’t think we can make these targets.”

The province needs to put a cap on emissions that’s in line with the federal caps and could consider keeping the consumer carbon tax but freezing it, she said. “I think we are in a very difficult political environment to introduce additional stringent climate policy,” she said.

The federal government has been working toward introducing a cap on greenhouse gas emissions from the oil and gas sector “at a pace and scale necessary to contribute to Canada’s climate goals, in a way that allows the sector to compete in the emerging global clean economy.”

Much depends on the next federal election and a lot can happen quietly in the background, Rhodes added, saying there’s a need for policies that both reduce emissions and address affordability.

Rick Smith, president of the Canadian Climate Institute, said industrial carbon pricing has broader support and contributes up to four times as much to emissions reductions as consumer pricing does.

While the carbon tax makes a difference and the associated emission reductions will have to be found in other ways if it is removed, he said, it’s a mistake for advocates to focus obsessively on a single policy.

“This one policy has sucked the oxygen out of the room for what should be a much broader discussion,” Smith said. “It’s just a fact that other policies that are far less discussed and could use some improvement are much more important in terms of emissions reductions.”

The senior climate policy adviser for the David Suzuki Foundation, Thomas Green, said opponents of the carbon tax had succeeded in convincing many people it was to blame for inflation, even though that was false. “Populist messaging was very good at making people hate the carbon tax,” he said. “It’s easy to make people hate something with ‘tax’ in the name.”

The opponents have a bigger target in mind, he said. “This is an attack on climate action more generally.”

In the B.C. election, Eby was clear a re-elected NDP government would move forward with climate action even if the carbon tax needs to go, and that was a better approach given the political challenge it had become, said Green.

To hit the province’s targets for carbon emission reduction, a topic largely absent from the campaigns, will mean implementing other policies, he said. “It’s going to take some heavy lifting to hit the targets.”

Though politically tough, it would still be worth salvaging B.C.’s carbon tax, perhaps frozen at current levels for a time, and retaining the climate action rebates, he said. “I think that would be preferable to rolling it back completely and having to come up with something from scratch.”

Green is also a member of the province’s Climate Solutions Council, which advises the provincial government on climate action and clean economic growth. He said he’s hopeful that among the 44 Conservatives elected, there are some who understand climate change is not a hoax and that the health effects, such as from wildfire smoke, are real.

“Political will is critical and it’s not helpful to have polarization,” he said. “As much as possible, we want this to be a non-partisan issue.”