Petro-giants will accept a carbon tax

Canada's oil industry explicitly backs the introduction of a carbon tax as the best way to reduce greenhouse-gas emissions.

As the B.C. government mulls over introducing a tax on fuels with major carbon content, such as oil, gas, and coal, in the next provincial budget, the Calgary-based Canadian Association of Petroleum Producers says a well-designed tax has several advantages over an emissions-trading system.

"The carbon tax, levy, or whatever you want to call it, is the better way to go," Rick Hyndman, CAPP's senior policy adviser on climate change, told the Georgia Straight.

In materials for an April 18 presentation to CIBC World Markets, Hynd ­man argued a tax of $15 per tonne of carbon dioxide–with a warning that it could escalate to $50 in 15 years–would provide clear direction and give emitters time to adjust.

"Start with something that you can manage as a first step," he said by phone. "Then ratchet it up when you understand the consequences and have dealt with all the details."

This support for a carbon tax contrasts with CAPP's position earlier in the year. "Sticking with the kinds of policy we've been discussing–targets for emission intensity improvements in industry and investment in technology–is the right way to go. So neither a full-blown carbon tax or international emission trading makes sense at this point," Hyndman told CBC News last February.

Hyndman told the Straight that an emissions-trading system–in which greater polluters can buy credits from those emitting less–has "the wrong design when it comes to CO2". The Kyoto Protocol established emissions trading as a way for countries to meet their commitments to lower greenhouse gases, and the European Union set up a carbon market in 2005.

"The concept underlying the cap-and-trade system is that there is a level of emissions above which you do anything to avoid, and below which you care nothing about, and that is just wrong," Hyndman said. "It is the wrong concept for greenhouse gases. What we need is not a particular level of emissions in any country, province or industry. What we need to be doing is be on a track to restructure our energy-supply sector from a high-CO2sector to a low-to-zero CO2."

The CAPP presentation said that confusion about the issue among the local public, politicians, and industry, as well as internationally, has impeded progress on the carbon-tax approach. The presentation noted that there is a "failure to recognize that putting a price on emissions is the 'market' approach [because it] allows and drives decentralized decisions by business and consumers". It also pointed to a "lack of understanding that emission trading is privatized carbon taxation".

In an interview with the Straight, B.C. Finance Minister Carole Taylor would not confirm whether she intends to introduce a carbon tax in the February 2008 budget.

"What we are doing is all of the analysis right now," Taylor said by phone. "That [February 19] is when we will release all of our climate-change program”¦There is certainly an opportunity. That is what we have been looking at."

Kitsilano-based Voters Taking Action on Climate Change is lobbying Taylor to impose the tax. Other groups, such as the Vancouver-based Wilderness Committee, have jumped onboard.

According to VTACC founder Donald Gordon, a carbon tax and tax shift that is revenue-neutral would not be a government tax grab, because after-tax income would remain unchanged. Income tax can be reduced to offset a carbon tax, which is an incentive to reduce one's carbon footprint.

"It doesn't take a wonk or an accountant to actually understand that," Gordon said by phone. "Okay, we get a credit on our income tax and we pay a carbon tax, and therefore you have some personal discretion about whether or not you want to continue to drive your Hummer and pay the cost, or jump on the bus and enjoy the savings. I think people see the inherent logic, basically, that it makes no sense to continue to treat the atmosphere like a free dumping ground for everybody. If we are actually going to deal with the problem [of reducing greenhouse gases], there has to be some cost associated."

In contrast to CAPP's $15 proposal, VTACC suggests an initial tax of $30 per tonne of carbon dioxide, which the group claims equates to an extra seven cents per litre of gasoline. However, Gordon said it is important for Taylor to "show us the schedule" of when the carbon-tax rate would be increased to a level where it would help achieve Premier Gordon Campbell's stated goal of reducing greenhouse-gas emissions by 33 percent by 2020.

Taylor said that since November 25, she has received more than 150 e-mails on the carbon-tax issue.

"That wouldn't count all the ones I have received since last summer," she said.

Recently, 70 B.C. economists, including SFU professors Jonathan Kesselman and Mark Jaccard, signed an open letter to Taylor advocating a revenue-neutral carbon tax and tax shift.

Taylor said the legislature's finance committee reported back to her November 15. "The recommendation, loosely, said, 'We would prefer that you use tax incentives, rather than disincentives and turn to a carbon tax as a last resort,'" Taylor said. "When it came out, the press covered it as the public saying 'no' to a carbon tax. But when you read it, they didn't say no to a carbon tax."

CAPP donated $2,990 to the B.C. Liberals in 2005 and again in 2006. On Saturday (December 8), VTACC director Kevin Washbrook will speak on the carbon tax as part of the "D8: Kyoto Now" global day of action from 11:30 a.m. to 2 p.m. at the Vancouver Public Library's central branch.