It’s time to put the planet before politics

May 9, 2009

In April, scientists reported that another piece of the Antarctic ice shelf, this one six times the size of Vancouver, collapsed. According to David Vaughan of the British Antarctic Survey, “There is little doubt that these changes are the result of atmospheric warming.”

We know that global warming is caused largely by a build-up of heat-trapping fossil-fuel emissions in the Earth’s atmosphere, but the emissions continue to increase. This past week, our nation received dubious international recognition for having the worst record among G8 countries when it comes to reducing global warming emissions. The costs of climate change are being felt worldwide and are mounting in terms of damage from extreme weather events.

In British Columbia, we are in the midst of an election that pundits predicted would be all about the economy. But climate change and the environment have dominated the debate. As is clear from news headlines, the issue has become incredibly polarized. We implore all parties to refrain from the divisive and polarized politics of the past and help us restore the planet to its natural function.

Scientists alone can’t solve global warming. We need political will and we need action from all citizens. For the sake of the environment and the economy, it’s time to come together on this issue with clear solutions.

Climate change affects us all and is one of the most pressing problems of our time. That’s why we, as leaders from diverse sectors of B.C. society, are joining to call on all B.C. political parties to adopt a fast-track climate action plan for British Columbia.

We believe B.C. already has a model that shows promise and that can set an example for the rest of the country. The latter point is crucial, as measures to combat climate change must be national in scope to be truly effective. But we must keep moving forward.

We pledge to all political parties that we are willing to work together to make B.C. a leader in climate change solutions — including new green jobs and investment — in a way that’s fair, cooperative and positive. Specifically, we’re calling on the next B.C. government, regardless of party stripe, to implement a number of key solutions.

We know we can build healthy communities through investing in green infrastructure. This investment can create thousands of new jobs today and improve our quality of life by reducing traffic, establishing more green spaces and parks, and creating more pedestrian-, bicycle- and transit-friendly communities.

Today, transportation accounts for 36 per cent of B.C.’s greenhouse gas emissions. Most B.C. communities rely on cars for transportation. This leads to more congestion and air pollution and negatively affects our health.

We need a sustainable transportation network, including faster, more frequent and more efficient transit service across the province.

We’d like to see the B.C. government invest on average $650-million a year between now and 2020 in new provincial funding for public transit to improve service with more energy-efficient buses and rapid bus and rail lines across the province.

Give us a B.C. government that will provide B.C.’s cash-strapped municipalities with the money or tools to deal with their transit-funding shortfalls. For example, B.C.’s 21 Metro Vancouver municipalities need to address the existing funding gap of $150-million now and to ramp up quickly to $450-million per year by 2011.

B.C. should also provide funds to complement U.S. President Barack Obama’s $8-billion high-speed passenger rail plan, which includes a Pacific Northwest section joining B.C. to the U.S. The funds would be used to build the Canadian portion of the network.

B.C. should invest at least $100-million a year in bicycle infrastructure such as bike paths, bike lanes and traffic calming to improve cyclist safety, and increase funding for pedestrian infrastructure.

Give us a government that will offer zero-interest-rate loans to B.C. communities through the Municipal Finance Authority so that municipalities can invest in green infrastructure, such as community energy systems that will reduce emissions and improve the quality of life in our communities.

We want to see more new and affordable clean-energy solutions available to B.C. households, including energy-efficiency retrofits and innovative measures such as solar roofs and more fuel-efficient vehicles. At the same time, we want our businesses and industries to be competitive in the economy of the future by being more clean and energy-efficient. In B.C., industry accounts for about 35 per cent of our greenhouse gas emissions.

We’d like to see an increase in funding for home and business energy-efficiency retrofits to $100-million yearly. This level of provincial funding, combined with an increased investment from the federal government, will green more than 400,000 homes in B.C. by 2020 — half of all B.C.’s homes.

Let us improve B.C.’s climate plan by using both the carbon tax and the cap-and-trade system to spur innovation and development of clean-energy solutions. The carbon tax and cap-and-trade system should cover all of B.C.’s greenhouse gas emissions and should be enhanced over time to enable B.C. to achieve or surpass its legislated emissions target.

We urge the government to increase the existing low-income carbon tax credit at the same rate as price increases on greenhouse gas emissions. We also believe a portion of carbon tax revenues should fund public transit, energy-efficiency and renewable-energy projects.

B.C. should adopt world-leading energy-efficiency standards on an on-going basis for cars, light and heavy trucks, appliances and buildings.

B.C. can provide a model for an effective nation-wide climate change plan that can show the rest of the world we’re serious about this problem. This would be good for both our economy and our environment — and for our children.

As citizens of this planet, it is our responsibility to put the planet before politics and urge the next B.C. government and federal politicians to do the same.

* Dawson Creek Mayor Mike Bernier
* Castlegar Mayor Lawrence Chernoff
* Whistler Mayor Ken Melamed
* North Vancouver Mayor Darrell Mussatto
* Prince George Mayor Dan Rogers
* Kelowna Mayor Sharon Shepherd
* Dr. Warren Bell, Canadian Association of Physicians for the Environment
* David Boyd, Co-chair of Vancouver’s Greenest City Action Team
* Ian Bruce, David Suzuki Foundation
* Naomi Devine, Common Energy co-founder, UVic.
* David Dranchuk, Coordinator for Societal Ministry, Diocese of New Westminster
* Guujaaw, President of the Haida Nation
* Mike Harcourt, former B.C. premier
* Marc Lee, Senior Economist, Canadian Centre for Policy Alternatives
* David Suzuki
* Milton Wong, Chancellor Emeritus, Simon Fraser University and non-executive board chair, HSBC Investments (Canada) Ltd.

But there is no reason to believe that the only thing the NDP would do is cap and trade. There are other ways to reduce GHG emissions besides implementing cap and trade, even without a carbon tax. There are, for example, additional investments that could be made in transit and energy efficient technologies, reversals of policies that subsidize the development of new mines and other energy intensive industry, additional regulations governing energy use. The NDP would undoubtedly pursue at least some of those alternatives to help offset whatever impacts the elimination of the carbon tax would have. They may not be as economically efficient as a carbon tax, but nor would they be so devastating as Jaccard would have us believe.

But as disappointing as Jaccard’s crusade against the NDP was, John Robinson and co’s op-ed in the Vancouver Sun this past weekend (excoriating the NDP and lavishing praise on the Liberal’s carbon tax) was almost too much to bear. In their unabashed effort to pick political sides, they completely missed the key policy issues that need to be addressed.

The Liberal’s tax, as currently proposed, is too modest to have a significant effort on carbon emissions. If the tax is retained and is to form a central part of the emissions reduction plan, we need to consider how high the tax proponents will demand that it go – more to the point, how high the politicians will let it go. It would be nice to discuss, and for the proponents and politicians to be transparent, on where this is going.

Also, the carbon tax is technically flawed. The objective of the tax is to achieve specified target reductions. But reductions in gasoline and other fossil fuel use will depend on their total price, not simply the tax component. The size of the tax that is needed with crude oil at $50/ barrel is a lot more than at $150. The question is: how do the proponents think this problem can or should be fixed – how are they proposing that the tax be linked to the price of crude oil and other fossil fuels.

The most troubling policy issue, and one the proponents are curiously silent on, is the notion that carbon taxes should be revenue neutral. Since the tax is levied on carbon emissions precisely because of the climate change and other costs those emissions may have, surely the revenues from the tax should be dedicated at least in part to offset and mitigation measures.

It is almost certainly the case that investing carbon tax revenues in carbon-reducing measures, like additional transit, or climate change mitigation measures, like additional flood control or crisis preparedness, would be far more significant than the behavioural effect of the tax itself. The use of gasoline and most other fossil fuels is what economists like to describe as inelastic (relatively unresponsive) to price. A modest increase in the price will not have much effect on consumption.

Of course revenue neutrality provides a nice political spin. But isn’t the point to get away from political spin. The proponents of the tax are adamant we must meet our reduction targets. We won’t get there without public investment; and we won’t get the public investment if new sources of revenue are not available for that purpose. If it isn’t revenues from a carbon tax, it would be nice to know where the new sources of revenue will come from.

The issue is not simply to tax or not to tax. The issue is how to tax if that is part of the plan, and what else must accompany it. It’s the package, not one component, and currently a small one at that, that needs to be addressed.

UPDATE: The online version has now been fixed.

Can the NDP deal with B.C.’s economic challenges?

By Marc Lee

In BC’s 2009 election, parties must respond to two fundamental challenges: first, a crashing provincial economy with rapidly rising unemployment; and second, the global climate crisis, which demands that BC dramatically reduce its greenhouse gas emissions.

Rather than pit these objectives against each other, good policy choices should instead link them together: our efforts to boost employment through stimulus packages should be strategic investments that put BC on a sustainable path, not just a return to old patterns of development.

While the NDP platform takes some important steps on both fronts, it does not offer the bold new direction and vision many might expect with global capitalism on its knees. The NDP attacks head-on some of the most egregious and controversial policies of the Liberals, like run-of-the-river power projects and the flawed P3 infrastructure model. But ultimately, the platform is cautious and lands very much in the middle of the road.

This is problematic in that the NDP platform accepts both the culture of fiscal conservatism that has come to dominate Canadian politics (manifested in an over-emphasis on tax cuts and balancing the budget), and an overly rosy view of the state of the economy. It takes as given the Liberals’ February budget, which describes an alternative universe in which unemployment averages 6.2% for 2009, and BC weathers a small storm just in time for the opening ceremonies of the Olympics.

But the provincial unemployment rate hit 7.4% in March, up from 4.3% a year before. Since last summer, 83,000 jobs have been lost. With new housing starts down 70% compared to last year, construction employment will plummet even further as current projects are completed, meaning an unemployment rate that could hit double digits by year-end.

This inevitably means the half-billion dollar budget deficit tabled by the Liberals is a work of fiction. Both parties need to come clean about how they would amend their plans given higher-than-budgeted deficits in the $1-2 billion range.

Moreover, falling consumer spending and business investment mean government must lean even harder against these adverse economic winds. In terms of stimulus, the 2009 budget package will do little to curb rapidly rising unemployment. BC is in an excellent fiscal position, and should err on the side of doing too much, not too little.

The NDP platform adds more stimulus, with a modestly larger deficit and higher capital spending. Together, these provide additional stimulus of 1 to 1.5% of GDP if we count the multiplier effects. How the stimulus is spent is also important, and the NDP’s plan is focused on green infrastructure and social investments.

The NDP platform also takes aim at the climate change file. Its program would cap emissions from large industrial sources starting in 2010, and will harmonize those efforts with a North American cap-and-trade system. They also propose major public transit investments, low-interest loans for building retrofits for energy efficiency, and a royalty on “flaring” in the oil and gas sector (the source of 13% of BC’s GHG emissions).

Unfortunately, most of the attention of climate policy has been on the BC carbon tax, which is neither as horrible as the NDP paints it, nor as potent as advocates make it out to be. Given BC’s fiscal challenges, the NDP would do better by fixing some of the problems with the tax (like ensuring it covers all GHG emissions), using the revenues to fund climate action (rather than borrowing), and shoring up a low-income credit that fails to protect low-income households as of 2010.

The incrementalist approach of the NDP platform also shows on social policy. Even during the recent boom, many British Columbians were left out. The Liberals have overseen the shredding of social assistance, the gutting of social housing construction, and the dubious distinction of BC having the lowest minimum wage in Canada.

The NDP platform would reverse some of this damage. It would raise the minimum wage to $10. It aspires to create 2,400 new social housing units this year, and 1,200 per year after that – a move aimed at a major reduction in homelessness. The NDP have said they would bring in a poverty reduction plan with targets and timelines, but do not say what those targets should be. And the new money for social assistance in their platform is inadequate given this goal and the economic situation.

Now that BC’s housing and commodity booms are over, and the recession is getting worse each week, structural weaknesses in BC’s economy have been revealed that were not cured with a tax cut. BC needs a bold new vision that combines social justice principles with a sustainable economy. By this yardstick, the NDP makes some progress, but by pandering to tax cuts falls short in its ambition.

As for run-of-river IPPs, the fact is they are not very green, at least not if you value the large amount of land and water resources they cumulatively impact in pristine wilderness areas. They are not needed in the amounts that the government is forcing BC Hydro to acquire with its incredibly ill-considered and needlessly costly self-sufficiency and insurance policies. The energy they provide is relatively low in value, delivered disproportionately in the spring when least needed. They are high price. And the private contracts under which they are purchased provide BC Hydro with no long term security of supply. At the end of the contract terms the IPP power must be repurchased at then prevailing market prices.

Liberal Energy Policy forcing the development of excessive amounts of these ‘green’ IPPs is what I like to call a strategy to buy high-sell low (because much of the IPP power will be surplus and exported at relatively low prices) and buy now-buy again later (at the end of the initial contract terms). En realidad, as my Baja friends would say, its not just godless socialists that could question its wisdom.

As for the carbon tax, the hysteric debate and forecasts of doom have nothing to do with what is being proposed. Axing the Liberals carbon tax will mean fuel prices by 2012 may be 7 cents per litre less than they would otherwise be. That is a relatively small difference in price (less than the very annoying daily swings in price that sometimes take place at your friendly service station). And that in turn will have only a marginal impact on fuel consumption and related emissions. The demand for fuel is widely recognized by economists as inelastic (relatively unresponsive) to price.

Whatever you think about the Liberals carbon tax — a token gesture to attract green votes or a bold, albeit modest, step in the right direction — it is almost irrelevant to the much larger issues that need to be addressed. How and when will a cap and trade system for large emitters be put in place? How will transit initiatives be developed and financed to reduce auto use? Will vehicle levies or system tolls be introduced? If we are going to retain a carbon tax, how high should it go, and how can it be linked to the price of crude oil, so that it isn’t too small when crude prices are low and too high when crude prices go through the roof. Shouldn’t carbon tax revenues be devoted at least in part to offsetting the emissions on which they are levied? And shouldn’t we coordinate any carbon tax policy, like cap-and-trade, with what is going on elsewhere.

There is an opportunity to have an interesting debate here. But, at least so far, passion, politics and new found religious zeal seem to rule.

In hindsight, the carbon tax was perhaps the worst-timed policy announcement ever, with prices at the pump jumping by about 40 cents per litre between the announcement in the February 2008 budget and July 1, when it was implemented. This shows both how quickly a carbon tax can be introduced (compared to years of negotiations for a cap-and-trade system) and how the intent of the tax can be subverted by market forces. The relatively puny 2.3 cent a litre carbon tax absorbed much of the public anger about rising fuel prices that were about 20 times larger in magnitude.

Thus, an important lesson is that we need more than a carbon tax, but to regulate fuel prices (so that they act like stable market prices plus a rising carbon tax). This would enable households to avoid opportunistic price increases at the pump every time a storm is headed for North American shores, and the broader problem in 2008 of a speculative bubble in energy prices. It would provide the clear market signal of rising prices that proponents of a carbon tax want. The tax would essentially become hidden and represent the difference between the wholesale and retail prices (including other federal and provincial fuel taxes, too). This mechanism could also provide a floor price for emissions under an emergent North American cap-and-trade system (price volatility is one of the downsides of cap-and-trade).

We also need more than a carbon tax in terms of complementary public investments and standards/regulations around energy efficiency, alternative power and urban and inter-city transit. The carbon tax is too small on its own to affect behaviour, and even at 7.2 cents per litre in mid-2012 (if it survives that long) it will not make a dent in BC’s greenhouse gas emissions. The tax needs to be much higher, like twenty times higher, if we are to induce shifts in people’s transportation habits (this process was underway last year but lower fuel prices have undermined those gains). However, we too often think of a driving metaphor when contemplating the efficacy of a carbon tax; large, industrial emitters will feel the pinch at lower levels of the tax.

In any event, one major problem with the NDP’s proposal to scrap the tax is that the tax could be used to finance those good things above that need a public boost. Instead, the NDP would have to borrow the money for those investments, and with the BC budget in a sea of red ink, the bias will be towards doing too little. Another problem is that any strategy to reduce greenhouse gases that is successful will lead to higher consumer prices. Even with the carbon tax, two-thirds of the tax paid by households will be indirectly embodied in the price of goods and services people buy in the marketplace. Cap-and-trade or regulatory approaches that increase costs for compliance will lead to higher prices for GHG-intensive goods and services, and overall that is a good thing. But we need to be honest about how we are going to address distributional aspects of those higher prices.

With carbon pricing alone, we just end up pricing out the lowest-income people. But addressing distributional issues is where the revenue from the carbon tax also comes in handy. The current “recycling regime” of the carbon tax dedicates about one-third of revenues to a low-income credit in year one (2008/09), which more than offsets the average impact of the tax for the bottom two quintiles. But this credit is not scheduled to grow in line with the carbon tax, and that progressive result at the bottom disappears this July, and becomes regressive as of July 2010 (on average, households will pay more in carbon taxes than they get back from the low-income credit). Toby Sanger and I crunched the numbers in a paper released last Fall.

Carbon pricing alone is also not enough because the households with the largest carbon footprints are those with the largest incomes (Hugh Mackenzie, Hans Messinger and Rick Smith detailed Canada’s ecological footprint by decile in a study last year for the CCPA). The richest households can buy their way out of change, so standards and regulations are needed to ensure that emissions from the largest-emitting households are reduced.

Fixing the tax also means that it should be applied to all GHG emissions, not just to burning fossil fuels. This means applying it to flaring and pipeline leakages in the oil and gas sector (the NDP propose something like this), process emissions in the cement and aluminum industries, and to landfills (although the current regulatory approach to this latter area may in fact make more sense than applying the carbon tax). And we should even consider applying it to exports of coal and natural gas, as these lead to massive GHG emissions outside BC’s borders that are not counted in our emission totals (only emissions associated with the extraction of the resource, which themselves are huge, are counted).

Most environmentalists are aware of these shortcomings but see the carbon tax as an important first step. But too much of the attention of climate policy has been on the carbon tax, rather than the host of other measures that need to accompany it. Rightly or wrongly, the carbon tax has become a litmus test for seriousness on climate change to the great detriment of the NDP. While I disagree with the NDP’s stance on the carbon tax, their budget platform essentially endorses the rest of the BC government’s climate action plan and does make some improvements: the royalty on flaring mentioned above; more public transit investment; and short-term caps on emissions from the largest industrial emitters. The NDP proposal for low-interest loans for housing efficiency retrofits is a weak link; we need to get beyond incentives and start mandating audits and retrofits, particularly for older building stock, and finance that through BC Hydro bills so households do not have to lay out any cash upfront but still see lower Hydro bills (a classic win-win).

So go the finer points of climate policy. There are many shades of grey, good things and bad things to be said about both the NDP and the Liberals. But by tossing the carbon tax, the NDP was won the eternal wrath of most of the enviro movement. So it is a shame to see the Pembina Insitute, David Suzuki Foundation and Forest Ethics hold a press conference to that effect, without giving credit for the good parts of the NDP platform. And given the shortcomings of the carbon tax, to fully endorse the Liberals seems a bit much, especially when there are some glaring contradictions in the Liberals’ approach, such as pressing forward with an astonishingly expensive ($3-5 billion) Port Mann Super-Bridge that will drive unsustainable suburban development further up the Fraser Valley, and that will clog up the new bridge within a few years of its opening (the NDP is silent on this one). The Liberals also want to increase oil and gas development in the Northeast – which creates few jobs but produces enormous greenhouse gas emissions – and have announced road expansion into the oil and gas patch, effectively a ramping up of subsidies to the industry (the flaring royalty notwithstanding, the NDP seems to think expansion is fine, too).

A painful bottom line is that, for all of the work on climate action over the past couple of years, and after much ado about legislated targets for greenhouse gas emissions, BC enters the election without a plan to get to its 2020 target of a 33% reduction (hello, balanced budget legislation?). The current climate action plan is estimated to get 60-80% of the way there. The remainder was considered by a Climate Action Team that reported last summer, but whose recommendations have not been implemented. And there is no plan to build these into a new climate action plan. And the kicker is that the safety valve in the CAT report that allows us to meet our 2020 targets: the carbon tax.