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The era of climate leadership is over; The era of climate partnership may be upon us

posted Aug 24, 2016, 9:55 AM by Joel Wood   [ updated Aug 24, 2016, 9:57 AM ]
BC released their Climate Leadership Plan to a chorus of boos last Friday afternoon (though a few people were saying boo-urns, e.g., Resource Works, CAPP). The plan title is clearly a misnomer; with no further increases planned for the carbon tax and Premier Clark emphasizing letting other jurisdictions catch up, the plan is the official end of Gordon Campbell's legacy of climate policy leadership. With Alberta's new carbon tax slated to match BC's on January 1st, 2018, the BC plan represents the end of BC's climate leadership, and the beginning of (hopefully) an era of climate partnership in Canada.

The Premier cited the vague concept of "competitiveness" as a reason to wait until other jurisdictions catch up before raising the tax. However, according to an EcoFiscal report, the competitiveness impact of carbon pricing is relatively small for BC's economy compared to the economies of other Canadian Provinces. Furthermore, the coverage of the carbon tax does not extend to the LNG boom the province has been dreaming about; it is my understanding that fugitive methane emissions will be handled by regulations and other facility emissions through an alternative regulatory instrument similar to Alberta's Specified Gas Emitters Regulation (a hybrid tax/cap system based on emissions intensity). So increasing the carbon tax would not affect the province's LNG export plans.

Competitiveness is just one aspect of climate policy though; the external damages from our emissions should also be considered. One estimate of these damages is the Social Cost of Carbon (SCC) as estimated by the US EPA. The EPA's SCC ignores low probability catastrophic risks and equity weighting, so should be considered a lower estimate of the external damages of emissions, but it is a good place to start until others catch up. The BC carbon tax is now lower than the EPA's central estimate of the SCC, and the SCC increases over time. So in BC our carbon price no longer accounts for the damages our emissions will impose. I am OK with the BC government not focusing on specific targets of emissions reductions, but in the absence of targets, I'd like to see them focus on a carbon price more closely matching the SCC; this would be climate leadership.

I have seen this plan branded as "giving up the climate battle" and alternatively as standing up to "eco-activists"; but I do not think those narratives fit well. Maintaining the highest carbon price in North America hardly represents giving up. And if the Premier wanted to stand up to "eco-activists", why would she have selected them to sit on the governments expert advisory panel? I am only, at best, an armchair political scientist, but this probably has more to do with the new federal government and/or the next provincial election. 

During the federal election, the Liberals signalled their plan to take a provincial-federal cooperative approach to climate policy. They recognised the actions that BC and other provinces had unilaterally taken, and did not want to come in with a top-down approach. Trudeau even called it a "medicare approach to fight climate change"; to me this suggests that there will be "carrots" on the table for provinces that implement climate policy. Indeed, post election, the Premiers and the federal Environment Minister have been meeting about climate policy and there is clearly bargaining and negotiation going on to determine how the carrots will be awarded. Andrew Leach made the comment on twitter that there are now 3 main camps within these negotiations: BC & AB focusing on the level of policy effort (i.e., carbon price), ON & QC focusing on emissions targets, and SK focusing on inaction. If there are carrots on the table to be eaten in exchange for more stringent climate action, Premier Clark probably wants her fair share. If she committed her province to an increasing tax while these negotiations are ongoing, she may be limiting her share of the carrots. 

But maybe the prov-fed negotiations and talk of other jurisdictions catching up are a convenient excuse. This could be more about winning the next election. As the following figure (cropped from cool new research) shows, the carbon tax enjoys a majority level of support across BC, with Langley (I blame Jordan Bateman.....joking) and North Eastern BC being the only exceptions. 

And below are the results of the 2013 provincial election (adapted from CBC's election results website). From these maps it is difficult to visually identify a correlation between carbon tax support and voting Liberal. The two areas where the carbon tax does not enjoy majority support (Langley & North Eastern BC) do vote Liberal, but Premier Clark didn't scrap the tax, she just kept it at its current level. The tax does enjoy very strong support along the SkyTrain Expo Line Corridor, encompassing areas that voted NDP. But i think a statistical analysis would be needed to draw any conclusions. Although I do see one potential issue with doing a statistical analysis since people who support the carbon tax may not necessarily support further increases: that is a different question than was asked. 

So where does that leave us? This could be a new era of pan-Canadian Climate Partnership or it could be about winning the next election. The BC election is not until next May, so depending on how the prov-fed negotiations go, a campaign announcement of an increased carbon tax accompanied by a basket of federal carrots is still a possibility.