The debate over carbon taxes in Canada exploded this week, with a taxpayers’ group calling for an end to British Columbia’s first-of-its-kind tax on carbon emissions while the head of a major international energy group urged Canada to adopt it nationwide.
Maria van der Hoeven, executive director of the International Energy Agency, told a conference in Toronto on Monday that the federal government should adopt a carbon tax, which she said would ensure that what people pay for energy reflects its true cost.
In an interview with the Globe and Mail, van der Hoeven said Canada’s oil sands were “a very important part of the security of supply, not only to Canada but also to the United States,” but argued Canada is not doing enough to develop renewable energy sources. Carbon tax proponents often argue it can spur the development of renewables by making them more affordable relative to fossil fuels.
Van der Hoeven’s comments reflect the apparent growing popularity of the carbon tax among policy leaders around the world, and may be a sign of the sort of political pressure Prime Minister Stephen Harper’s Conservative government may find itself under if carbon tax policies begin to take hold.
But in Canada, where former Liberal Leader Stephane Dion was seen to have suffered politically for backing a carbon tax, the idea continues to be heavily controversial.
In what may be a twist to Canadian politics, the carbon tax, typically considered a “conservative” idea, is backed primarily by Liberals and opposed by the NDP, who prefer a cap-and-trade system, as well as by the Conservatives, who have resisted climate policies that would mean added costs for energy-intensive industries.
On the same day as van der Hoeven’s speech, the Canadian Taxpayers’ Federation released a 24-page report urging B.C. to scrap its tax, saying it is harming consumers’ bottom line and has not reached its environmental goals.
The tax “is hurting B.C.’s competitiveness both in North America and internationally. Taxpayers—both individual and business—need relief,” the CTF said.
Though the B.C. government states that the carbon tax is revenue neutral and is offset by lower personal income taxes, the CTF argued it only offsets $228 million of the $1.2 billion collected through the carbon tax.
The B.C. tax has been increased four times since it was put into place in 2008, and drivers now pay an additional 6.67 cents per litre when tanking up.
But University of Ottawa law and economics professor Stewart Elgie told the Vancouver Sun the CTF is wrong on all counts. He said fuel consumption has dropped 15 per cent in B.C. since the tax was implemented, the largest drop of any province.
B.C.’s carbon tax, one of the first of its kind in the world, has gained a lot of media attention internationally, with a recent New York Times op-ed calling it “the best climate policy in the world.” The Economist also praised the tax in a column last year.
And anecdotal evidence suggests the business community is warming to the idea too, with even energy industry big-wigs coming around to the carbon tax as the most practical way to spur green energy investment and reduce emissions.
Senior executives from Cenvous and Suncor, two of Canada’s largest oil sands operators, told the Tyee Solutions Society this spring that they back a carbon tax.
“Chief executives from more than 150 of Canada's largest corporations have likewise publicly urged the government to establish a price on carbon,” The Tyee reported.
Australia’s Labour government enacted a carbon tax this year, taxing it at $24.74 (USD) per tonne -- slightly less than the $30 per tonne that British Columbia charges.
A carbon tax on airlines, making its way through the European Union’s bureaucracy, has outraged airlines from the U.S., China and India, who have threatened to refuse to pay the tax, which would be collected on all airlines flying to the EU.