Carbon levies on consumers lead to the swamp

By John Hollins, CACOR Board of Directors *

The National Post recently carried a story entitled “Why Vancouver is getting utterly hosed on gas prices.”  Vancouver may be getting hosed, but most of its citizens are not getting wet.  Vancouverites are used to having gas prices that vary by a factor of up to two during the course of a year or two.  They adapt somewhere else in their budget, except for those who can barely afford to run a vehicle — because ready mobility despite congestion is of overriding convenience.  And that will continue for quite a long time — history shows that the penetration into the market place of technologies that require nuts and bolts is a long process, a much slower process than Moore’s Law for solid-state electronic devices.

My analysis of the first eight years of the BC carbon tax demonstrated that it had no discernible effect on consumption (https://canadiancor.com/carbon-tax-british-columbia/).  This should not be a surprise. Unlike commercial enterprises, where the financial bottom line is generally of overriding importance, the behaviour of citizens as a community of independent actors is much more complex, taking a raft of considerations into account.

We know, however, that a levy on carbon in corporate settings can work; for example, California, Quebec and, until recently, Ontario have sold trading rights in the billions of dollars. That is not a surprise either. Soon after the Toronto Conference on the Changing Atmosphere in 1988, many smart Canadian companies started applying carbon pricing in their private internal management. Many of them anticipated and were ready for a carbon levy when it eventually arrived.

One might think that a carbon levy — any carbon levy — could do no harm in addressing global warming. One would be entirely wrong, however, if an ineffective levy or a levy applied in the wrong place created the false impression among decision makers and citizens that this would be enough to deal with an existential issue. The exiguous carbon tax in BC has had no evident practical effect on emissions, despite the hoopla from some quarters.  It is a tax applied in the wrong place.  It is an impediment to effective action by the Canadian governments that are trying to follow in the footsteps of BC; they are currently heading for the swamp. And the governments of Ontario and Saskatchewan are having a grand time pushing them more rapidly towards the swamp.

So, what to do? If something that you are doing isn’t producing results, do ANYTHING else. If what you’re doing isn’t working, ANYTHING else has more chance of success (Ross Dawson, corollary to the first law of Cybernetics).

To start, let’s abandon carbon levies on consumers; if financial instruments are to be used, let’s work through entities that are driven by and understand financial considerations and are not on a four-year or shorter electoral cycle. It’s the task of government to set goals, but recent Canadian governments have been proven incapable of delivering substantial long-term programs — think, for example, of the acquisition of military hardware, even trucks, or the failure of the Phoenix pay system.

Then, let’s assist electors and governments to understand two basic things,

that:

• global warming is an existential issue for generations not too far into the future; and
• emission of the chemicals that cause global warming is the result not just of energy policy and practice, but of the collective paths of development and ways of living of seven billion people on a single planet.

John Hollins, a biophysicist, is Past Chair of the Canadian Association for the Club of Rome (https://canadiancor.com)

Post Scriptum

Between 2006 and 2016, the graph of gas prices in Vancouver looks like an extended profile of the Rocky Mountains: the valleys are at 80¢/L and the peaks at 150¢/L.  A precipitous drop, from peak to valley, occurred coincidentally at the time that the BC Carbon tax was introduced in 2008 that completely dwarfed the initial tax of 2.2 ¢/L.

The provincial government collects a transit tax of 25¢/L in the Vancouver area on top of the federal excise tax of 10¢/L and a GST of 5%, for a total of about 40¢/L; how could anyone imagine that adding just another 7¢/L for carbon would lead to a significant change in behaviour? A carbon levy at this scale is futile and represents wishful thinking — or delusion. It may be comfortable to imagine that a small, revenue-neutral carbon tax can make a substantial difference, but the superordinate challenge of global warming requires clearer thinking, political courage, and effective action by citizens, corporations and governments.