British Columbia’s 7¢ per litre carbon tax, lauded as world-leading when it was imposed in 2008, is credited with reducing gasoline demand in the province by 11 to 17%.
And even though flaws in Canadian energy data undermine that claim, a group of business leaders in the province are calling for B.C. to double down on its carbon tax strategy. “More than 130 businesses—including MEC, Modo, NEI Investments, False Creek Collision, and SFU Community Trust—are together calling on the provincial government to increase the carbon tax by $10 per tonne per year, starting in July 2018,” the Pembina Institute reported this week. “They agree that taking the next steps on the carbon tax will benefit B.C.’s economy, help clean energy and clean tech businesses thrive, and encourage businesses to be better partners in reducing carbon pollution.”
But iPolitics calls B.C.’s achievements to date “too good to be true,” noting that other research finds much bigger price hikes are needed to achieve far more modest shifts in behaviour (on the order of a 25% to 50% price hike to achieve even a 1% reduction in gas purchasing).
According to retired energy executive Ross Belot, the exaggerated claim arises from errors in the data used to support it—which come from Statistics Canada. The agency’s budget was slashed under the previous Conservative government, and in 2008 it made several changes in the way it collects and processes energy consumption data.
As a result, regional estimates of gasoline consumption became far more erratic than underlying market demographics would suggest. “Any historical analysis based on those numbers will include what appear to be large errors, and will not be consistent with the data collected before 2008,” Belot observes. As well, privacy regulations that came into force in 2013 now require StatsCan to “suppress” certain energy statistics, including national gasoline imports.
“If you can’t say what gasoline demand looked like before or after the tax was introduced,” he asks, “how can you say what effect the tax had on demand?”