Unpacking the carbon tax

VICTORIA – A polling company asked British Columbians if they wanted “big polluters” to pay the carbon tax, rather than the poor schmucks sweating as they pull up to the gas pumps.

You bet we do. Oil companies especially, but those industrial pollution pigs with their top hats and fat cigars should be on top of the list. They’re getting off easily while we pay, says B.C. NDP leader Carole James, who finds herself in an odd tag-team with Prime Minister Stephen Harper heaping scorn on the notion of carbon taxes.

This is an example of the political guff around carbon taxes, which is why a group of B.C.’s top university professors got together last week to debunk some myths.

It’s true that big industries like cement plants are not paying carbon tax on emissions from their “industrial processes” like the cooking “clinker”. But heating a limestone-clay mixture to 1,500C takes a lot of natural gas, and they pay carbon tax on their fuel like everyone else.

The result, notes SFU professor Mark Jaccard, is that nearly 70 per cent of B.C.’s carbon tax will be paid by industry, while individuals (especially low-income individuals) will get two thirds of the corresponding tax cuts.

Of course “industry” includes trucking and other businesses that will have to pass on fuel costs to consumers if they’re going to survive.

And some industries seem to be getting a sweet deal. Take Spectra Energy, with four natural gas refineries in northeastern B.C., others in Alberta and a head office in Houston, Texas. Its fuel needs are met with its own raw material, and its industrial carbon emissions are free until North American governments sort out how they’re going to manage a carbon trading market.

Spectra sells gas to homes, businesses and big users like cement plants at prices that have more than doubled in the past year. And as a bonus, the B.C. government just chipped in for more than a fourth of a $12 million pilot project so Spectra can capture and inject waste carbon dioxide into a deep salt-water layer under its Fort Nelson gas plant.

Don’t worry, says UBC political science professor Kathryn Harrison. Industry is paying now and will pay more when it has to buy carbon credits in an auction. Besides, says Jaccard, carbon trading and carbon taxes accomplish the same thing, and both end up costing the end user of gasoline, propane, coal or whatever.

Nancy Olewiler, head of SFU’s public policy program, puts the moral case. Calling from Ontario, she noted there are still few Toyota Priuses around. This reminded me of former finance minister Carole Taylor’s observation that it’s hard to find whole wheat bread there. B.C. has always led Canada on environmental issues, and it’s proving it again by making the leap to carbon prices while maintaining a generally low-tax environment for business.

Olewiler doesn’t buy the currently fashionable idea that speculation is pushing up oil prices when there’s no actual shortage. There are “real and growing scarcities,” she says, and the best long-term strategy is to reduce consumption permanently.

One more thing you should know about the B.C. carbon tax. Most people understand it’s due to double by 2010 and double again by 2012, when it will add more than seven cents to the price of a litre of gasoline.

What’s not often said is that’s just the start. The 2012 carbon tax is based on $30 per tonne of carbon emissions.

According to the National Roundtable on the Environment and the Economy, to make a significant impact on emissions the price of carbon should be $75 a tonne by 2020.

NDP claims ripped

Jaccard is an advisor to Premier Gordon Campbell’s climate action team, but he also worked for the NDP government, which appointed him to head the B.C. Utilities Commission and to do gasoline and electricity price reviews.

He says he’s appalled at the gross errors in media and political criticism of the B.C. carbon tax. The Canadian Taxpayers’ Federation slams it without even mentioning the offsetting income tax cuts. And the B.C. NDP releases a climate change plan that promises a Danish-style carbon tax instead.

But the Danish carbon tax is higher than B.C.’s and it’s aimed more at consumers than at industry. Is that what Carole James is promising?

The Scandinavians, of course, have had carbon taxes since the 1990s, when countries like Canada just talked and signed empty international agreements.

Tom Fletcher is legislative reporter and columnist for Black Press newspapers. tfletcher@blackpress.ca