A Tale of Two Provinces: Carbon Taxation in British Columbia and Alberta

• In Event: Environmental Politics in Canada

Abstract

In 2008, the Canadian province of British Columbia (BC) adopted a policy that was celebrated globally as a “textbook case” of carbon taxation. The BC tax was praised for covering combustion emissions from households and industrial alike at the same price, schedule for annual price increases, and revenue-neutrality, via reductions in individual and business tax rates. Although many predicted that BC’s policy innovation would rapidly diffuse across Canadian provinces, the next provincial carbon tax was not announced until 2015. Remarkably, that carbon tax was adopted by neighbouring Alberta, a province that accounts for the vast majority of Canada’s oil production, with resulting per capita emissions of more than 60 tonnes/person. That the Alberta Premier announced a carbon tax surrounded by industry, environmental, Indigenous and labour leaders was again celebrated as climate leadership from an oil producing state. This paper compares the two cases, arguing that adoption of politically-contentious carbon taxes in both provinces reflected normative commitments of governing parties, facilitated by Westminster parliamentary institutions. However, in both cases political risks were mitigated by acquiescence of carbon-intensive industries. BC’s carbon-intensive mining and fossil gas industries supported a revenue-neutral carbon tax on both households and industry because they feared the alternative would be a cap and trade program that placed a heavier burden on large emitters, which accounted for only about 35% of provincial emissions. In Alberta, oil sector leaders welcomed a carbon price at a level that would not significantly impact their production costs per barrel but could yield reputational benefits for a sector facing US opposition to pipelines carrying its “dirty oil.” Still, even with business on board, voters on balance opposed both provinces’ carbon taxes, with more that a little encouragement from opposition partisans (from the left in BC and right in Alberta). In addition to comparing adoption, the paper contrasts the survival of the BC carbon tax with repeal of the Alberta tax, though also subsequent replacement of Alberta’s tax by a federal tax with steadily increasing carbon price. Lessons for carbon pricing include the importance, but also risk, of political leadership, and the importance of joint action to mitigate both competitiveness impacts and political blame.

Author

• Kathryn Harrison, University of British Columbia