On Canada Day, I bought 43 litres of gasoline at a filling station just north of Parksville, British Columbia. This was the first day of the provincial carbon tax of 2.4 cents per litre, so the tax accounted for about $1.03 of my purchase. Of course, I didn’t figure that out until later. At the time I saw only a growing gulf between the gasoline trickling in and the money pouring out .
It is my business to be aware of things like this, but in case I forgot the BC government took care to saturate the broadcast and print media with advertisements promoting the carbon tax.
So did the message get through? Did my trauma at the pump discourage me from driving to Long Beach? No, but it did turn me into a bit of a miser. I found myself turning the engine off at lights, even though the Island was a bit hotter than usual and I could have used the AC.
Did it change my lead-footed driving habits? No. The route from Parksville to Pacific Rim National Park is hilly and treacherous, so it wasn’t pedal-to-the-metal as usual. But the drive back, and especially the divided highway from Parksville to Victoria—or at least the stretches between the level crossings—was. And I was driving with the traffic.
This makes me skeptical of the government’s claim that by 2020 the carbon tax will have cut motor vehicle greenhouse gas (GHG) emissions by 3 million tonnes a year. The extra 2.4 cents per litre will have as much effect as the pre-tax rise in gasoline prices from $1.20 to $1.23—i.e., zero. And if the market price drops more than 2.4 cents from the current level, the 2.4 cent price signal will be irrelevant.
This part of the plan has been oversold, which could cause problems for the government. The government should have focused instead on the certain emission reductions that will come when British Columbians shift from natural gas (another taxed commodity) to electricity in space heating. As I said in May 2007, BC electricity puts out one-sixth the GHGs of natural gas when used for space heating. Space heating in BC accounted for roughly 7.4 million tonnes of GHGs, according to Environment Canada.
Nevertheless, from the viewpoint of emission-reduction policy the Liberal government of BC has made a shrewd gamble. It is a safe bet that by 2020 the price of gas will have risen considerably above the current level, perhaps to the point at which people really will curtail driving. It is also safe to say that by 2020 there will be many more hybrid gasoline-electric vehicles commercially available. This, not changes in driving habits, is what will chop GHGs from motor vehicles. Of course, the government, whichever party, will claim that its fiscal policies achieved the reduction.
The interesting political question is, how will the carbon tax affect the fortunes of the party that introduced it? The BC Liberals are gambling that people are generally being truthful when they tell pollsters they are willing to pay to help the environment. The provincial NDP are gambling that people hate taxes more than they love the environment. BC green groups, welded as always to the counter-culture notion that energy is bad, welcome any policy that punishes energy consumers.
And of course the federal Liberals, who have rolled out their own carbon tax plan (which currently does not envision hitting retail gasoline; see article), hope that any positive reaction to the BC tax rubs off on them and that negative reaction doesn’t.
I predicted last September that the environment would not play any role in the Ontario provincial election, even though it was a hot partisan topic at the time (see article). I was right. How will the BC gambit play out in the next federal election?