British Columbia carbon tax
[1] Unlike most other governments, British Columbia's electricity portfolio largely consists of hydroelectric power, and its energy costs, even with the tax, are lower than in most countries.
[2][3] Public opinion polls in 2007 showed that the environment had replaced the economy and healthcare as the most important issue to a majority of respondents.
Before the tax actually went into effect, the BC government had sent out "rebate cheques" from expected revenues to all residents of British Columbia as of December 31, 2007.
[18] According to the World Bank, British Columbia's carbon tax policy has been very effective in spurring fuel efficiency gains.
[21] The report was released to coincide with an internal review of the policy by the BC government, which ultimately decided to freeze the tax at 2012 levels for five years.
A report in 2015 suggested an 8.5% reduction to date in greenhouse gas emissions, which may also be affected by cross border purchases of vehicle fuel.
[30] Considering only gasoline and diesel, this indicates that emissions from these sources made up a smaller percentage of the overall economy a decade into the program than when it began, though this is an incomplete and ultimately correlational, rather than causal, analysis, since it does not account for the counterfactual.
[31] Causal impact studies have also been published, however, with evidence generally showing that the tax has caused a decrease in emissions, albeit not to the scale that the province has hoped to achieved given, for example, Canada's signing of the 2015 Paris Climate Agreement.
A 2015 review of preceding academic literature on the program concludes in the abstract that “[e]mpirical and simulation models suggest that the tax has reduced emissions in the province by between 5% and 15% since being implemented” and that “polling data shows that the tax was initially opposed by the majority of the public, but that three years post-implementation, the public generally supported the carbon tax.”[32] A 2019 academic research paper that looked only at diesel consumption found that the tax caused a statistically significant decrease in diesel consumption and diesel-generated emissions.
[33] A 2021 counterfactual analysis showed “no significant negative impacts on GDP” and that the pass-through of the carbon tax into energy prices was complete.
[34] The authors conclude, as stated in the abstract, that “implementing revenue-neutral carbon taxation contributes to lowering harmful greenhouse gases into the atmosphere without hurting the economy.”[34] A 2022 study using machine-learning-based difference-in-differences, synthetic control, and a break-detection approach showed that the policy “has reduced transportation emissions but not ‘yet’ led to large statistically significant reductions in aggregate CO2 emissions” because the “existing carbon taxes (and prices) are likely too low to be effective in the time frame since their introduction,” indicating that the carbon tax rate needs to increase in order to identify effects on economy-wide CO2 emissions with statistical significance, even if transportation-based CO2 emissions can be seen to decrease with statistical significance.
[35] Beyond emissions and overall GDP, a 2017 paper found that “the BC carbon tax generated, on average, a small but statistically significant 0.74 percent annual increases in employment over the 2007–2013 period,” providing evidence that a revenue-neutral carbon tax may actually encourage, rather than adversely affect, employment, as critics of the policy had previously asserted.
