This is especially true when the fate of vitally important, publicly owned assets such as water hangs in the balance. To have faith that water resources are managed responsibly, basic facts must be known. Who has approved access to water? How much do they have access to? And where do they get it?

As the gatekeeper for information on the booming water usage in British Columbia’s natural gas sector, B.C.’s Oil and Gas Commission (OGC) has the answers to such questions and a whole bunch more. That’s because the OGC has statutory authority to issue short-term water-use permits to natural gas companies. Because of that, the OGC can tell you which companies hold water rights, the name of the creek, river, lake or reservoir that the water rights pertain to, what the maximum daily water withdrawal limits are for individual permits, and even the coordinates that will allow you to find a particular water source (in many cases an unnamed creek) on a map.

But the OGC does not post such essential information on its website, and has actually suggested to members of the public that have requested such information that it may be difficult and costly to retrieve.

None of this makes sense. Far more complex data is maintained by other provincial government agencies and is readily available. If you go here, for example, you can learn more than you may care to about what is logged in British Columbia – by company, by type of tree, and by whether the trees were logged on public or private lands. You can even learn how much usable wood companies elect to leave behind at logging sites rather than truck to mills, or what individual companies pay in fees to the provincial government for the trees they log on public lands.

You may need a bit of guidance to search the database. But a helpful public servant – at a contact number listed on the webpage – will gladly guide you through the steps. That’s how seriously the provincial government views the public’s right to know when it comes to forests.

When it comes to simple, baseline information on water, however, such transparency is nowhere to be seen on the OGC’s website.

This does not inspire confidence, and at the worst possible time – when the fossil fuel-rich northeast corner of B.C. is experiencing unusually severe droughts.

The oil and gas industry is the only industry in British Columbia that gains access to water without Ministry of Environment approval. All other users – from municipal water plants, to aluminum and iron smelters, to pulp and paper mills, to farmers irrigating their fields – obtain short-term or long-term water allocations from the provincial ministry responsible for protecting our environment.

The preferential status bestowed to the energy sector inevitably breeds suspicion. Such suspicion only grows when information that ought to be readily available is not.

The OGC is more than aware that escalating water usage by natural gas companies has the potential to become a thorny public policy issue. Particularly as companies engage in increased usage of “hydraulic fracturing” or “fracking” operations to unlock gas trapped in deeply buried shale formations. Such operations pump enormous quantities of water at thousands of pounds per square inch of pressure to fracture or break seams in the underground rock, thereby releasing the trapped gas.

To assuage concerns about such water usage, the OGC recently released a report on the topic. But reading the document simply reinforces the impression that the public is largely in the dark about the industry’s water consumption.

At one point, the OGC says that “a preliminary look” at water usage by natural gas companies operating in one shale gas-rich region of B.C.  known as the Horn River Basin found that the companies used “less than five per cent” of what they were allocated.

Putting aside what a “preliminary look” means, the report presents no figures on what water was assigned in the Horn River Basin versus what was actually used.

Once again, this does not inspire confidence.

As the regulator responsible for issuing water permits to energy companies, the OGC can easily post information on water allocations. It can also, if it chooses, post information on what the companies report using by way of the water assigned to them.

Such basic accounting information is an essential prerequisite to the sustainable management of water resources. As such, it properly belongs in the public domain.

Those contradictions were highlighted by the approval the other day of a new EnCana natural gas facility in BC’s Northeast that will add over 2 million tonnes of CO2 per year to BC’s inventory when fully built out. From the Tyee’s coverage:

The province’s effort to curb greenhouse gas emissions is on course to suffer a 2.17 megatonne-per-year setback, after an environmental assessment (EA) certificate was approved for the $800-million Cabin Gas Plant last Thursday (Jan. 28). The green light to the EnCana-led project signals the onset of a shale gas boom in the million-acre Horn River Basin north of Fort Nelson.

… The carbon dioxide implications get larger when considering the end uses of the gas. The initial volumes of gas produced daily at the plant would add up to 7.9 million tonnes of emissions each year when combusted. At full production, that downstream emissions rise to nearly 16 million tonnes — nearly 25 per cent of B.C. emissions, based on a 2007 baseline. Much of the gas will be exported to the United States.

Campbell’s retort is that natural gas is “actually a bridging technology that allows us to move to the new cleaner energies.” There is something to this argument, and it might even be true if we were able to guarantee that coal-fired power would be shut down in place of natural gas generated power. But no such guarantees are evident in this deal. All emissions will be additional to current emissions.

And not only that, the much-lauded carbon tax does not even apply to most of the emissions from oil and gas development, as it does not cover the flaring and venting of gas, or pipeline leaks.

This further goes to show that there is no political will in Canada to say no to the oil and gas industry. At some point we will have to confront the, er, inconvenient truth that the only bona fide sustainable path forward is to not get our energy out of the ground, or if we do to mandate that the emissions must be buried (sequestered) after combustion. That is, we need a moratorium on new oil and gas projects unless they implement carbon capture and storage (CCS).

So the question for my friends in the environmental movement: is now a good time to revoke that award to Premier Campbell, and replace it with one of the more notorious Copenhagen awards, the Fossil of the Day?

Letter to the editor

Re. “Maintaining momentum in oil and gas,” May 7.

The oil and gas industry should stop its political mischief-making, and obfuscating the numbers about the industry’s contribution to BC’s greenhouse gas (GHG) emissions.

The estimate that flaring, fugitive gas leaks and other waste gas sources account for approximately 13 per cent of BC’s GHGs is based on our research, derived from data from the Ministry of Energy, Mines and Petroleum Resources. We stand by this research.

The industry’s David Collyer claims emissions from these sources account for between one and two per cent of BC’s GHG emissions, and cites the BC Oil and Gas Commission as his source. He is wrong. The Commission itself has made clear that this figure refers only to flaring, not the far more damaging (from a GHG perspective) venting and pipeline leaks.

Applying a royalty on this wasted gas, as the NDP proposes, is good public policy. Collyer notes that the BC Liberals are proposing to extend the carbon tax to some of these fugitive emissions. This would be an improvement to the tax, although the Liberals propose taxing only a portion of all flared gas.

Not only would financial penalties like royalties capture revenues for the public, but more importantly, they would create an incentive for the industry to quickly make the capital investments needed to capture these flared and fugitive emissions, and ensure this gas goes to market, rather than being let loose into the atmosphere.

Signed,

Seth Klein and Ben Parfitt, Canadian Centre for Policy Alternatives.

In today’s Vancouver Sun, David Collyer of the Canadian Association of Petroleum Producers makes the case for expanding the industry based on some dubious facts. First there is this gem:

The industry has invested almost $30 billion dollars in British Columbia over the last eight years, resulting in 34,000 direct and indirect jobs.

According to BC Stats, the oil and gas industry contributed only 2,200 direct jobs to the provincial economy in 2008. In addition, there are perhaps the same amount of jobs in the various support services for oil and gas (it is hard to tell because there are 9,300 jobs listed but they are lumped in with support services for mining; the latter had 14,300 direct jobs, so if we take the same proportions for the support services as for direct jobs, we are looking at 1,000 to 2,000 jobs). Sum it up and you get maybe 4,000 jobs in oil and gas, or about 0.2% of total employment in the province.

Indirect jobs are trickier to assess as they include retail and service jobs unrelated to the industry but that would not be there if the income from oil and gas workers did not exist. But in general, input-output models put indirect jobs at one-for-one with direct jobs. So doubling the 4,000 above to 8,000 to account for indirect jobs, we have a generous estimate of the employment impact of the industry that is nowhere close to what is claimed by CAPP. At most, about half of one percent of BC employment has some roots in oil and gas exploration.

Here is another claim:

Emissions from [flaring and other fugitive sources associated with oil and gas extraction] accounted for between one and two per cent of B.C.’s GHG emissions, rather than the 13 per cent noted in the platform (according to statistics from the B.C. Oil and Gas Commission).

According to the most recent National Inventory Report on greenhouse gas emissions, fugitive emissions in BC accounted for 8.7% of BC’s emissions in 2007 (this lumps in coal mining, which historically contributes about one-tenth of the total). The estimate of 13% comes from my colleague Ben Parfitt, who drew on data from the BC Ministry of Energy, Mines and Petroleum Resources, and is an average over a decade (see this post). If there is a discrepancy in the data, it is whether the real percentage is 9% or 13%; neither number is close to the 1-2% claimed by CAPP and the Oil and Gas Commission.

That is not the end of the story, either. Fossil fuels burned to extract oil and gas are higher than that, another 11% of BC’s 2007 emissions. And none of this captures the emissions associated with end use by the consumer, whether in BC or in the US (emissions are counted where the fossil fuels are burned).

At the end of the day, the oil and gas industry contributes few jobs but causes a very large share of our total emissions. It is hard to imagine BC meeting its legislated target of a 33% reduction in greenhouse gas emissions by 2020 without some major action that hits oil and gas.

BC’s Economic Challenges and the Liberal Platform

By Marc Lee

The BC Liberal platform features many feel-good photos and proud statements taking credit for the province’s recent boom. But read between the lines, and one realizes that after eight years in power, the Liberals have effectively run out of ideas.

The platform fails to offer any vision for the future. The Campbell Liberals made some progress on climate change actions over the past couple years, but the platform offers nothing new. Meanwhile, the Climate Action Secretariat, once residing in the Premier’s office, has been relegated to the Ministry of the Environment, which recently had its budget cut.

Premier Campbell deserves credit for bringing in the carbon tax, plus a variety of other climate measures that represent the low-hanging fruit of greenhouse gas emission reductions. While the carbon tax has its shortcomings, in my view it is a positive first step, and one that carries enormous symbolic value for environmentalists.

Still, the government enters the election without a plan in place to get BC to its legislated 33 per cent reduction in greenhouse gas emissions by 2020. And there are some glaring contradictions between the climate plan and other parts of the Liberals’ platform.

One of those contradictions is the oil and gas industry. Between 2001 and 2006, oil and gas industry emissions surged by far more than the carbon tax will ever reduce come 2020. Recently, Premier Campbell was in the Northeast, promising more new investment in oil and gas extraction, which may make it virtually impossible to reach our targets. And it is not like the oil and gas patch is a huge employer – about 2,200 direct jobs in 2008 – for all that pollution.

Highway expansion and the $3-4 billion Port Mann Super-Bridge also go against the climate-action grain. This expensive mega-project will only push more unsustainable, car-oriented development further up the Fraser Valley. This threatens valuable farmland, and means that congestion will be back within a few years. No jurisdiction in the world has ever built its way out of congestion problems.

The Liberal platform offers no real vision for the economy either, now that the great boom is over. Unemployment rose rapidly through early 2009, and with housing starts down 70%, the worst is yet to come, as construction workers finish their current projects and head straight to the back of the unemployment line.

The current economic collapse is not the fault of the Liberals, but then neither was the boom their creation. BC’s economic fortunes rest on what happens outside our borders, in particular in the export markets of the US and Asia, and in Ottawa, through the Bank of Canada and the federal government.

As cheerleader-in-chief, Premier Campbell may have pumped up the home team’s confidence, but let’s face it, the cheerleaders did not win this game. Like other parts of the world, low interest rates drove a bubble in real estate, leading to a massive expansion of construction activity. And high commodity prices driven by export markets made BC’s resource industries take off.

In February’s budget, the Liberals offered little in the way of stimulus, mostly re-announcing projects already underway or relying on federal stimulus dollars. There is much more that should be done to retrofit our infrastructure to be green – like public transit and energy efficiency upgrades – and to meet long-neglected social needs, like affordable housing, addiction and mental health facilities, or residential health care.

Bad economic times mean that the small deficit projected in the budget will inevitably turn out to be much larger. The Liberal platform promises that BC will “live within its means”, but faced with a $1-2 billion deficit, will a new Liberal government pile on more spending cuts and risk making the economic picture worse, or will it accommodate a larger deficit? What does that mean for the few new promises in the platform, like all-day kindergarten or U-passes for all Vancouver post-secondary students?

In politics, as in business, marketing is everything. The BC Liberals have branded themselves as the party of good economic times, but also the party with the long-term vision to tackle climate change. At a time when families in BC are concerned about the future on both fronts, the Liberals have put forward an unambitious “devil you know” strategy to win re-election.

Even during the good times, not all British Columbians were part of the boom. Poverty rates did not drop in any meaningful way, homelessness doubled, and inequality worsened with each passing year. BC needs a plan, with targets and timelines (just like climate change) to address poverty, especially as the recession deepens its grip.

With a lack of vision and too many contradictions, the platform does not provide any sense of how Campbell the Third will govern.

Like most of the data coming out these days, this economic report card is worse than expected. We should think about hiding it from our parents. For starters, BC’s real GDP fell by 0.3% – not a big drop, mind you, but the first actual fall in provincial GDP since 1982. Most observers now expect declining GDP for 2009, but a drop in 2008 is very much a surprise.

In the 2009 BC Budget, tabled just two months ago, economic growth for 2008 was estimated at 1.0%, slightly lower than growth of 1.3%, the average estimate of the Economic Forecast Council. This tells us yet again that our forecasting has been too biased toward good times, and we are not developing economic plans or fiscal policies with contingencies for bad times (that we hope will not materialize). The esteemed EFC did not even see a recession in 2009 as late as last Fall, and the BC government seems to have been equally delusional.

In 2008, the whole goods-producing part of the economy, i.e. the export sector, basically fall apart. That forestry got killed is probably of no surprise to anyone living in the Interior. Resource-based industries showed downward movement across the board, including a drop of 15% in forestry, agriculture and fishing. I’ve pasted Statscan’s summary below.

BC’s economy is facing a double-whammy: a demand shock as export markets to the US and Asia drop simultaneously (in 1998, it was just the Asian engine that sputtered); and a supply shock arising from the rapid drop of commodity prices, meaning it costs BC more in exports to buy the same amount of imports. On the way up, these forces, strong demand in export markets and rising commodity prices, essentially made a big part of BC’s boom overall, and almost all of it outside Vancouver, Victoria and Kelowna.

The other shoe to drop in 2009 will be the construction sector. In 2008, construction was a source of growth, up more than 4%. With the sharp drop off in new building permits and construction starts, this sector will turn negative in 2009. In employment terms, consider that there were about 235,200 employed in construction at its peak last summer. By March this number had already dropped to 187,800. This pattern will have huge ripple effects throughout the rest of the economy. It bodes ill, for example, for retail trade, which plummeted to 0.6% growth in 2008 (though still positive) from 7% the year before; more unemployment and broader consumer retrenchment will lead to a decent drop in 2009.

All of this reinforces my concerns that the economy is in worse shape than either the NDP or the Liberals are willing to admit on the campaign trail. We need to press our prospective leaders in the next two weeks on what their economic plan is, and how they are going to handle a much larger deficit than what was projected at budget time. Is either prepared to run the types of large deficits that will be needed as the economy worsens (tip: appeals to the Bank of Canada to puchase provincial debt should be made loud and vociferously, as the Bank contemplates a new round of unorthodox monetary policy measures).

This has relevance for another storyline in the GDP statistics: the growth of the public sector. BC’s GDP performance would have been deeper in the red had it not been for 3% growth in education, health care and social services, and almost 4% for public administration. In times like these, when consumer spending, business investment and export markets are down, the only major sector that can step up is government. In 2008, the BC government leaned against those headwinds – but this is in hindsight, the government thought the wind was still at its back.

In 2009, with the storm gaining strength, the lesson is that the government must do more, not less, to avert a major drop in economic output. The meme of BC “living within our means” and the excessive attention paid to keeping the deficit small (and returning to budget balance within two years) are contractionary ideas that will make the economy worse in 2009. That attitude has already settled in in Victoria to some extent, but could get worse. Making large budget cuts to “share the pain” is exactly the wrong thing to do right now, and is the type of move that turns recessions into depression.

Anyway, here is the blurb for BC from the official publication:

The effects of a sharp drop in output of the forestry industry (-18%) rippled through the economy. The decrease was triggered by a slowdown in housing construction in the U.S. combined with a high Canadian dollar in the first half of 2008. Forestry-related manufacturing, including sawmills and paper manufacturing, posted large declines. Affected by these declines, the wholesale industry contracted while transportation and warehousing services remained flat. With economic activity slowing, demand for energy was also affected. The output of utilities was down 4.0%.

Exports fell 6.8% following a small decline in the previous year. The 2008 downturn was largely due to a drop in lumber products.

Output in the mining sector was down as oil and gas extraction and metal ore mining reduced production. However, with prices high, especially for commodities such as coal and natural gas, revenues poured in. This income helped to offset the losses in the forestry sector and corporation profits registered a small gain in 2008.

After a decline in 2007, construction grew again in 2008. Business investment in non-residential structures picked up with projects related to oil and gas extraction and electricity generation. Government capital expenditure increased 0.3% after a cumulative gain of 80% over the previous six years. Housing starts fell off putting a damper on housing construction. Investment in residential construction declined 4.1%.

Growth in personal spending decelerated in 2008 to 2.8%. This was the slowest growth since 2001. Purchases of durable goods fell as sales of cars and trucks declined.

Labour market conditions stayed strong. Labour income increased 5.6%. This pace was well above the national growth rate but below the British Columbia average of the previous five years. Employment advanced 2.1% while the unemployment rate edged up to 4.6%.

The slowdown in the economy was also experienced in the service industries. Only health and public administration grew more quickly than in 2007, benefiting from government expenditures on goods and services, which advanced at a similar rate as in the previous year.

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.

“Let me tell you what’s happened in the energy industry in British Columbia in the last eight years: thirteen billion dollars of investment,” Campbell told a crowd of about 60 at Sudeten Hall.

… “We’re not just going to build a great new northern energy corridor, we’re going to build a great opportunity with the Asia-Pacific; we’re going to open new opportunities for British Columbians,” he said. He also outlined unconventional natural gas reserves in the Horn River Basin that he said could power 650 million homes for 15 years.

So this is the dark side of the green agenda: more oil and gas expansion. Given the street cred of Premier Campbell on the climate change file, one might expect the opposite: an end to new oil and gas extraction, perhaps even a wind-down of existing projects. After all, extracting oil and gas emits huge greenhouse gases, accounting for a big slice of our provincial total emissions. And that is just the extraction, as we only count burning of those fossil fuels if done in BC. Once they cross the US border, they count in the emission totals of some other jurisdiction. In other words, we only sell the crack.

For some perspective on that $13 billion of new investment that is “keeping BC strong”, BC’s greenhouse gas emissions from this sector in 2001 were equivalent to 3.7 million tonnes (Mt) of CO2 in their production and extraction plus another 5.7 Mt from “fugitive sources”: pipeline leaks, venting and flaring (in both of these I have added in coal, which accounts for a smaller portion but is hard to cleave off in the data). This was 15.5% of BC’s total emissions that year, and the number goes up to 20.4% if also count fossil fuel burning to generate electricity.

Fast forward to 2006, the last year for which we have data, and emissions from production and extraction more than doubled to 8.1 Mt. Another 6.5 Mt came from fugitive sources. So fossil fuel production writ large amounted to 23.4% of BC’s emissions, up from 15.5%. One bit of good news is less use of fossil fuels in generating electricity, dropping to 1.5 Mt, although our total rises to 25.8% if we count those, too. Because these data are already three years out of date, it is reasonable to assume that they have continued to grow in 2007 and 2008, alongside major increases in energy prices.

In the big picture, BC emissions in 2006 were a total of 1.5 Mt higher than in 2001, an increase of 2.5%. That means other sectors of the economy stayed flat or even decreased their emissions slightly, while fossil fuel emissions surged. So yes, the carbon tax is nice and deserves applause, alongside other good initiatives. But the notion that the BC government is green is a large stretch, and new emissions from planned expansion will dwarf any beneficial impacts of the carbon tax. For example, Mark Jaccard (the only economist in Canada who models these things) estimates that the carbon tax will reduce BC’s emissions by 3 Mt in 2020 relative to “business as usual” whereas additional emissions from oil and gas were more than that over five-year period between 2001 and 2006.

And it is not like the oil and gas patch is a huge employer. Oil and gas extraction employed 3,600 workers in 2006, although that had dropped to 2,200 in 2008. Both are up from 1,800 in 2001. There may be a 1-2,000 other jobs on top of these in “support activities” for oil and gas, although it is hard to tell from the stats (both mining, which directly employed 14,300 in 2008, and oil and gas are included, and these support activities amounted to 9,300 jobs in 2008, so most of that is probably mining-related). But BC had 2.3 million jobs in 2008, so at best, the sector employs 0.1-0.2% of our workforce.

To accept an expansion of oil and gas, given its share of total emissions, would appear to be fundamentally undermine BC’s ability to meet its GHG reduction targets. Only if all other sectors of the economy delivered larger reductions as an “offset” could BC’s climate plan be realized.

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.

Case in point: as reported in the Sun, the government is announcing a $187 million road upgrade from Fort Nelson into BC’s oil and gas fields. This initiative will create 1,100 jobs, but is a blatant subsidy to the oil and gas industry, the source of 20% of BC’s greenhouse gas emissions (much more if we were to consider the emissions from burning that fuel out of province). Environmental NGOs have long been critical of subsidies to the oil and gas industry, and rightly so. What if the government lived up to the aspirations of its Climate Action Plan and put $187 million into green retrofits of buildings and alternative energy development?

Another obvious case is the $5 billion Port Mann super-bridge (well, $3.3 billion and rising). Its effect will be to create even more suburban communities up the Fraser Valley, locking in an unsustainable form of development for generations, and quite possibly at the expense of some of the best farmland in the province, which we will need down the road. The bridge will create lots of jobs but would we not be better off if we created those jobs as bus drivers by buying more buses to get people over the existing bridge more efficiently?