The Canadian province of British Columbia has a carbon tax that is not yet a year old and already it is on thin ice. First announced during the delivery of the 2008 budget and implemented July 1, 2008, British Columbia`s carbon tax policy came as a surprise to many observers in the Canadian environmental field and was considered a significant shift in policy on climate change for the Government of British Columbia. The orgin of the policy is thought to be as a result of the direct influence of Gordon Campball, Premier of British Columbia, who has been strongly influenced by the ‘green’ California Governor Arnold Schwarzenegger.
In the context of an increasing sense of urgency about environmental policy making, consideration of this new carbon pricing policy is instructive as the suggestion has been made that the B.C. carbon tax may be internationally significant as a model of carbon pricing policy.
However, despite the passing of the 2008 British Columbia Budget containing the carbon tax measure, the future of British Columbia’s environmental tax policy remains uncertain.
National politics may also influence the future of British Columbia carbon tax policy. In the Canadian federal system, the sub-national jurisdictions (10 provinces and 3 territories) retain control over natural resources, environment, and energy policy. As a result, the Canadian climate change and energy policy landscape has been described as a ‘patchwork’, differing significantly between the provinces in scope, scale, and instrumentation, and which suffers from a lack of coordination and leadership from the federal government. Without coordination of efforts across Canada, the compatibility of B.C.’s carbon tax with other provincial and federal actions might be limited, thereby reducing the overall effectiveness of the measure. In the October 2008 federal election the Canadian public clearly rejected the central policy of the opposition Liberal Party of Canada – a nation-wide carbon tax similar in structure to that of the provincial tax in British Columbia. Demonstrated public opposition to carbon tax measures across Canada may influence future decisions to increase the rate of B.C.’s carbon tax. The current rate is $10 CAD per tonne of carbon dioxide, or carbon dioxide equivalent, emissions scheduled to escalate $5 per year until reaching $30 per tonne in 2012. Those increases, and even higher rates in the future, will be required in order to achieve significant GHG reductions but they are at risk in an uncertain political and economic climate.
The effectiveness and the future existence of the B.C. carbon tax policy might also be influenced by international developments in carbon pricing, climate change negotiations, and global economic conditions. US President Barack Obama and Canadian Prime Minister Stephen Harper have both signalled their interest in the creation of a North America wide emissions cap-and-trade scheme and potentially new emissions reduction mechanisms will emerge from ongoing international negotiations proceeding under the United Nations Framework Convention on Climate Change. The impacts of the current global financial crisis might also have an impact on the future plans for increasing the rate of British Columbia’s carbon tax. Despite the fact that emissions tend to decrease during economic recessions, political reactions to the downturn might influence the ability of the carbon tax to reduce emissions effectively when the economy recovers (eg. if the carbon price does not escalate over time according to the proposed plan).
While it is too early to evaluate the overall impact of B.C.’s carbon tax, given increasing international trends towards the implementation of market-based mechanisms to meet stringent environmental targets (should the policy remian) B.C. may gain a ‘learning-by-doing’ advantage for having first implemented a significant carbon pricing policy in Canada and North America.