Presentation for the Climate Policy Initiative Tim Lesiuk Climate Action Secretariat Province of British Columbia

Transcription

1 British Columbia s Revenue Neutral Carbon Tax Presentation for the Climate Policy Initiative Tim Lesiuk Climate Action Secretariat Province of British Columbia

2 BC s Climate Action Plan Legislated targets to reduce GHG emissions from % by 2012 (interim target) 18% by 2016 (interim target) 33% by % by Climate Action Plan A price on carbon Comprehensive response Carbon Neutral Government Community Charters Adaptation Strategy Actions in every industrial sector Continues to be reinforced BC is, and will remain, a climate change leader 2

3 BC is a low GHG economy 62 million tonnes CO 2 e per year No coal-fired electricity, mainly hydroelectricity Limited heavy manufacturing Largest sector is transportation Other Industry Fossil Fuel Production Electricity Deforestation Waste Agriculture Buildings Commercial Transport Personal Transport 3

4 Climate Change is real in BC Mountain Pine Beetle Result of insufficiently cold winters to keep population in check 18 million hectares affected Devastated forest industry Tangible climate change impact on jobs, communities, BC economy Infestation well underway in 2007 contributed to public support for climate action 4

5 Revenue Neutral Carbon Tax Cornerstone policy Implemented in 2008 at $10/tonne CO 2 e 5 year schedule of $5/tonne annual increases (price certainty) $30/tonne as of July 1, 2012, no further increase planned Uniform price per tonne Applies to all fossil fuel combustion, peat, tires No exemptions by industry sector or activity Cornerstone financial component of BC budget $1.2 Billion of $30 + Billion provincial budget Balancing reduction in tax base over time with carbon tax rate increase reinforces price signal using market forces New emission sources generate new revenue to allow stronger tax cuts and positive reinforcement for low emission choices 5

6 Carbon Tax rate comparison Sweden Norway Finland British Columbia France Netherlands WCI Denmark Boulder Carbon Price Level ($/ metric tonne CO2e) Quebec CARB BAAQMD Adapted from Sumner et.al (2011) 6

7 Carbon Tax coverage Carbon Tax covers 70% of BC s total GHG emissions Agriculture Waste Deforestation Cement Mining and Smelting Electricity and Heat Combustion (Carbon tax covered) Industrial Non- Combustion Oil and Gas Forestry Manufacturing/ other TOTAL BC GHG Emissions 62Mt (2010) Industrial Non-combustion Emissions

8 Carbon Tax-related tax cuts -2012/13 $59 Million $77 Million Other Personal Tax Cuts Rural /North Homeowner Benefit $228 Million Personal Income Tax Cuts $190 Million Low Income Tax Credit $721 Million Business Tax Cuts Tax Reductions $1.3Billion 8

9 Implementation Uses existing fuel tax system administration and infrastructure Little extra administration resources required Allowed for quick implementation after budget, Carbon Tax Act passed. Taxation is at first point of import or production, then passed through the supply chain. Tax base on fuel volumes means no extra data needs Lack of data at outset was one key reason for leaving noncombustion emissions out of scope. Now looking at non-combustion emissions with new data 9

10 Reception Nov 2011: 57% support for BC carbon tax (Environics polling) Mixed reception among businesses Revenue neutral introduction was strong positive message (not a tax grab) Energy Intense Trade Exposed sectors raised concern Some pressure to diverge from revenue neutral for economic development Difficult to communicate Public confuses Carbon Tax with other climate issues (e.g. offsets, targets) Revenue neutrality hard to communicate, especially to citizens (where does all that money go?) 10

11 Review The Province is beginning a comprehensive review that will cover all aspects of the carbon tax, including revenue neutrality, and will consider the impact on the competitiveness of B.C. Businesses Kevin Falcon, Minister of Finance (2012) Opportunity to examine: EITE issues Future rate increases potential tax cut options New emission sources 11

12 BC s economy is relatively strong Real Gross Domestic Product (GDP) Growth Relative to 2007 (2007=100) British Columbia Canada Source: CANSIM Preliminary Real GDP by Industry at Basic Prices Subject to revision on release of Provincial Public Accounts

13 Within reach of 2012 interim target 70,000 BC GHG Emissi ions (KT CO 2 e) 65,000 60,000 55,000 50,000 45,000 40,000 35,000 Actual Emissions 2012 target 2016 target 2020 target 30,

14 Early signs of reduced fossil fuel use Motor Gasoline Sales 2007=100 Canada BC Diesel Sales 2007=100 Canada BC Light Fuel Oil Sales 2007=100 Canada Natural Gas Demand 2007=100 Canada BC BC

15 Signs of positive economic change Twice Canadian average for hybrid vehicle adoption 48% growth in clean tech sector Most active district energy market in Canada 20% of all LEED Gold buildings in Canada 785,337 tonnes of regulatory offsets retired LiveSmartEnergy Retrofits completed by 8,400 small businesses 5% of eligible BC homes 15

16 Challenges Several areas may pose challenges depending on decisions we make Natural gas and Liquefied Natural Gas expansion New industrial projects Commercial and off-road vehicles Maintaining revenue neutrality 16

17 Lessons Revenue neutrality was helpful for public and business acceptance and longevity of the tax program Tax cuts are not as visible to individuals as to businesses Clear, frequent, appropriate communication essential for Announcement and motivation Changes and rate increases What people get from the tax How to reduce tax liability or tax burden 17

18 Why is BC a leader? Catalytic effect of first movers California tailpipe standard: BC first Canadian jurisdiction to support Western Climate Initiative members followed (79% of Canadian GDP) Standard nationalized in US and Canada Next round being developed nationally Cap and Trade program BC first Canadian Province to join Design experience contributed to a robust program California and Quebec moving forward, Australia using as a template Real option for BC in the future Model for US and Canada 18

19 Thank You Tim Lesiuk Executive Director and Chief Negotiator Climate Action Secretariat Ministry of Environment Province of British Columbia 1+ (250)