IS REVENUE-NEUTRAL CARBON TAXATION WORKING IN BRITISH COLUMBIA?

The amazing climate scientist Jim Hansen, author of Storms of my Grandchildren, also came up with a suggestion for reducing fossil fuel use. Instead of "cap and trade" carbon taxation, which has been adopted and failed, he advocated a "fee and dividend" fossil carbon tax which would return all the money collected to the population on a per capita basis. One obvious objection to this is that the population will just spend all the money on fossil fuel. Another problem is that controlling elites will not particularly want to set up a scheme which tends to take more from the rich and give much of it to the poor with no cut for them. However, there is enthusiastic grass roots support for the idea of such schemes. Eventually, a revenue-neutral greenhouse gas (GHG) tax did get set up in British Columbia, and it is argued by supporters to serve as a test case for Hansen's fee and dividend approach. A report written by Kamanoff and Gordon in December 2015 claimed to demonstrate that the British Columbia tax had worked in comparison with the rest of Canada. Normally, one would expect such a document to use massaged figures, unfair comparisons, inappropriate sophistication, and similar such usual tricks of deception to present a conclusion fitting with the desires of its writers. In this case, the most conspicuous features included removal of electricity from the analysis and the attention given to comparison with the rest of Canada.

My graphs 1 and 2 shown here use data supplied by Kamanoff and Gordon and include electricity.

Graph 1: Per capita GHG emissions of British Columbia and the rest of Canada.

My graph 1 shows that GHG emissions in British Columbia (and the rest of Canada) had been tending to decline until the introduction of the tax. In British Columbia the tax started in July 2008 and was increased each year thereafter. Graph 1 might be argued to show that the increase in taxation was accompanied, after a short delay and once it had reached a significant value, by a slight general trend for GHG emissions to also increase. This is, of course, the opposite of what is supposed to happen.

Graph 2: Comparison between per capita GHG emissions of British Columbia and the rest of Canada.

My graph 2 allows the relationship between British Columbia emissions and those of the rest of Canada to be examined in more detail. (A fixed offset has been included to allow comparison of change over time, because the rest of Canada always emits higher.) Graph 2 could be argued to indicate that the increasing tax is associated with a general trend towards higher comparative GHG emissions. Again, this is the opposite of what is supposed to happen.

So, what went wrong?

Why didn't the tax seem to work? If it could work anywhere, surely any province with access to Canada's low fossil electricity should have a good chance. One answer is that the period studied was too short and perhaps the tax too gentle for any impact or lack of it to be detected reliably.

Why do the results claimed by Kamanoff and Gordon appear to be the opposite of those suggested by my graphs? The most obvious possible explanation is that Kamanoff and Gordon wanted to show the tax as working in order to boost support for campaigns advocating introduction of similar taxes worldwide.

Why might anyone campaign for a tax that won't work, or attempt to pretend that a tax is working if it is not? I would suggest the answer to this is the same answer to all the similar questions that should be asked about why people campaign for or focus on all sorts of other things that won't work to reduce climate change. Examples are divestment, other taxes like cap and trade, blaming of oil companies and governments and people in other countries, local currencies, ineffective electricity generation technologies, tokenistic behaviour, and so on, and on, and on. All those things we have invented in order to avoid facing our own responsibility.

In a few more years, when more data has come in, no doubt Kamanoff and Gordon or someone similar will produce another report that claims, again, to demonstrate how climate change can be tackled by bribing us with our own money to reduce our emissions. As if, for some reason, we have to wait to be bribed.

T.R.

References:

Storms of My Grandchildren: The Truth about the Coming Climate Catastrophe and Our Last Chance to Save Humanity
James Hansen
ISBN-10: 1408807467
ISBN-13: 978-1408807460

British Columbia's Carbon Tax: By The Numbers
A Carbon Tax Center report
by
Charles Komanoff and Matthew Gordon
December 2015