On Monday, December 7, 2015, governments and companies were lamenting the lowest price of oil in 6 years (US$37.50/barrel of West Texas Intermediate) when Saudi Arabia chose not to cut its oil production due to a lack of agreement by OPEC members. Experts are now speculating the price of oil will drop further to below $30/barrel when Iran, a significant oil producer, will have full market access.
This is good news! The Saudis are giving world leaders at COP21 in Paris the opportunity to implement their greenhouse gas emissions commitments back home. Adding a carbon tax on gasoline at this time will hardly upset drivers who are enjoying the low price of oil at the pump. The political backlash will be minimal! This is truly an ideal situation to establish on a global scale the parameters to move away from a carbon economy.
Take a look at the province of British Columbia as a model endorsed by the World Bank, and United Nations.
British Columbia has experienced real economic and environmental successes since it implemented its Carbon Tax in 2008, the easy way to implement carbon emissions cap-and-trade. It covers most types of fuel use, and carbon emissions.
The tax started out low, ($10 per tonne of carbon dioxide), and gradually increased to the current $30 per tonne. This works out to about CAD$0.07/litre ($0.27/gallon) of gasoline at the pump. What made the Carbon Tax so beneficial is that by law, the Carbon Tax is “revenue neutral”. This means the provincial government is required by law to cut equivalent taxes elsewhere.
In six years, British Columbia has cut $760 million from income and other taxes to offset the amount of revenue collected from the carbon tax! It is transparent.
The Carbon Tax sets the stage for carbon cap-and-trade.
As a result, B.C. now has the lowest personal income tax rate in Canada, and one of the lowest corporate rates in North America. This is good for businesses and jobs! It’s good for the economy.
The Carbon Tax has been extraordinarily effective at reducing B.C.’s carbon emissions, too, by 16% in 6 years. This is much higher than Canada’s Kyoto target of 6% reduction in 20 years! In other words, once the government is committed to reducing greenhouse gas emissions, the reduction is far greater than initially calculated. There are several reasons why.
By implementing the Carbon Tax, the provincial government impacted municipal governments to act in line with this commitment. Municipalities like Vancouver started to build new infrastructure for bicycles, and public transit. They encouraged electric vehicles by promoting charging stations in new offices and condominiums, and retrofitting older buildings. They effectively reduced the number of cars on the road by facilitating car-sharing by encouraging new buildings to accommodate them.
Vancouver, as a city, also benefited by being voted several times as one of the most desirable cities in the world. B.C.’s healthy lifestyle also translates into lower health costs for companies and governments. The ripple effect on the economy are hugely beneficial, and far greater than initially envisioned when the Carbon Tax was implemented in 2008.
The government’s commitment to reducing its carbon emissions created a cultural shift.
When the world leaders return home from COP21, they should be empowered by their commitment to transform their countries towards a greener, healthier economy. Transparency and full cost accounting will ensure the benefits of shifting away from a carbon economy will benefit more citizens as they adopt the cultural shift to conserve energy.
Sharolyn Mathieu Vettese
President
SMV Energy Solutions
www.smvholdings.ca