Economists around the world are recommending that we move towards systems that reward low-carbon, innovative, resource-efficient production. One way this is likely to happen is through carbon taxes: directly taxing for fossil fuel use and carbon emissions.
There is little support for this at the federal level in this country or, for that matter, in Canada. But carbon taxes have been imposed at the provincial level in that country and the results are eye-opening.
In 2008, British Columbia imposed a carbon tax of $10 per ton of carbon use that was scheduled to go up by $5 a year over the following five years. So the tax is currently $30 per ton, which on the fuel side translates to about 24 cents a gallon of gas.
The result of this tax is that fuel use in British Columbia went down by 16% while it went up by 3% in the rest of Canada. So the net was a 19% improvement in fuel efficiency compared with the rest of the country.
Some critics are concerned that a carbon tax would stifle the economy. However, the facts are that the GDP of British Columbia actually slightly outperformed the rest of Canada since the tax was imposed. It is difficult to say that the carbon tax actually helped the economy, but there is certainly no evidence that it harmed it.
All the revenues from the carbon tax go back as income tax cuts, which are skewed toward low-income households to reduce the regressive nature of the carbon tax.
Carbon taxes are becoming increasingly commonplace and deserve serious consideration.
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How British Columbia Gained By Putting a Price on Carbon
Photo, posted June 5, 2011, courtesy of Takver via Flickr.
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Earth Wise is a production of WAMC Northeast Public Radio.