What on earth just happened with B.C.’s carbon tax?

If you had the carbon tax on your bingo card as the biggest political news in Canada this week, congratulations! You’re a winner!

The drama started when federal NDP Leader Jagmeet Singh suddenly announced his party no longer supports carbon pricing that affects individual Canadians.

“We want to see an approach to fighting the climate crisis where it doesn’t put the burden on the backs of working people, where big polluters have to pay their fair share,” Singh told reporters on Sept. 12, as his caucus wound up three days of meetings in Montreal.

BC Conservative Leader John Rustad, who is promising to eliminate B.C.’s carbon tax if his party forms government after the provincial election in October, was quick to pounce on Singh’s statement. Rustad thanked Singh in a press release that called Prime Minister Justin Trudeau and B.C. Premier David Eby “out-of-touch ideological bedfellows” for supporting the carbon tax. 

Rustad said carbon pricing is “an economic disaster and an environmental failure” that “drives up costs on everything from groceries to gas, hitting families and businesses hard while doing absolutely nothing to lower emissions.”

Hours later, Eby was asked at a press conference whether he, too, had changed his mind on carbon pricing.

To the surprise of many, his answer was yes.

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If the federal government changes the law requiring a consumer carbon tax, “we will end the consumer carbon tax in British Columbia,” Eby told reporters, nodding to federal Conservative Party Leader Pierre Poilievre’s promise to “axe the tax” if his party forms government after the next federal election. 

“We will ensure that the big polluters pay a carbon price in our province to make sure that we’re taking action on climate change,” Eby stated.

The BC NDP’s flip-flop prompted a barrage of uncomplimentary press releases from other parties. “This is a government with no principles and no direction,” BC Green Leader Sonia Furstenau said in a statement. “Fix the carbon tax, make it fair, show how it can improve lives and invest in the transition we need.” 

Rustad, in the BC Conservatives’ second carbon tax press release of the day, took credit for Eby’s sudden reversal, saying it was “a desperate attempt to salvage his sinking political ship.” And the federal Green Party issued a press release calling the NDP the “No-Discernible-Principles Party.”  

For his part, Eby turned on the federal Liberal government, blaming it for damaging the former “political consensus” in B.C. that carbon pricing is an effective and fair way to reduce greenhouse gas emissions.

It’s enough to make your head spin.

In less than a year, carbon pricing has morphed from a widely accepted measure for tackling climate change to a political pariah.

What the heck happened? And what does it mean for the B.C. election next month? Read on. 

What exactly is B.C.’s carbon tax?

Carbon pricing has a long history in B.C., where it is usually called the carbon tax. 

In July 2008, the former BC Liberal government implemented the first carbon tax in North America. (The BC Liberals changed their name to BC United last year.) 

Different fossil fuels were taxed at different rates depending on the intensity of their carbon emissions. Industrial emitters were included — with a generous carbon tax break for liquefied natural gas (LNG) export projects that met certain standards. 

But individual British Columbians also pay the tax, which worked out to about 2.4 cents per litre of gas when it was first introduced.

The BC NDP opposed the measure. During the 2009 election campaign, the NDP ran on an “axe the tax” slogan. That’s right — the same slogan the federal and provincial Conservatives are using now. The tactic flopped and the pro-carbon tax BC Liberal government was re-elected to a third term.

B.C.’s carbon tax was originally revenue neutral, meaning other taxes were reduced to ensure the tax burden on British Columbians stayed the same. Terry Lake, who served as environment minister with the BC Liberal government from 2011 to 2013, called the revenue neutrality requirement a “very elegant” climate action policy.

“If you reduced your carbon footprint, you would pay less carbon tax and you would benefit from all the other tax cuts that were offset due to having a carbon tax,” Lake explained in an interview. 

The BC NDP eventually came to support the tax. After it came to power in 2017, the BC NDP removed the requirement that other taxes be reduced as the carbon tax increased. Since 2017, the carbon tax has risen annually by $5 per tonne of emissions from its starting cost of $10 per tonne. 

This year, it hit $80 per tonne, adding 17.6 cents to the cost of a litre of gas, about a three-cent hike.

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Eby defended the carbon tax as recently as this spring. When federal Conservative Party leader Pierre Poilievre wrote a letter asking Eby to support his effort to halt the federal carbon tax increase, Eby called Poilievre’s campaign a “baloney factory.”

Eby also warned nixing the tax would lead to significant increases in income taxes for people and companies — apparently because the government would need to recoup the lost revenue.

Who pays the carbon tax in Canada? 

In 2019, the federal Liberal government introduced its own carbon pricing regime, which applies in provinces that do not have their own carbon tax. It doesn’t apply in B.C. right now.

Provincial carbon pricing programs must match the federal price, which also hit $80 per tonne this year. 

That’s why B.C.’s carbon tax isn’t going away immediately. If Eby removed it, B.C. would join the provinces currently covered by the federal regime.

In October 2023, Trudeau announced people living in Atlantic Canada who heat their homes with oil would be exempted from paying the carbon tax on that fuel for three years. The announcement drew condemnation from premiers across the country. Many called for all forms of home heating — including natural gas — to be exempted from the tax as well.

Others called for carbon pricing to be scrapped entirely.

In B.C., most homes are heated with electricity generated by hydro projects or natural gas. Eby slammed the heating oil exemption as unfair, saying British Columbians also deserve a break on their heating bills. But he also defended the carbon tax, telling reporters last October, “here in B.C. we believe very firmly that part of the climate solution includes recognizing that carbon has a price.’’

In the year since the home heating oil exemption was announced, Poilievre and provincial conservative politicians have ramped up their attacks on carbon pricing. They claim it significantly increases costs at a time when Canadians are struggling to make ends meet.

Wait a minute, is the carbon tax supported by the right or the left? 

The answer is, well, complicated. 

B.C.’s carbon tax was created by a party that governed from the centre-right of the political spectrum. While it may be hard to believe in today’s political climate, conservative politicians were not always as hostile to climate action policies as many are today.

“If you go back to the 1990s it’s really quite amazing because conservatives were not contesting the underlying science of climate change — they were debating about the appropriate policy tools to use to curb emissions,” Will Greaves, an associate professor with the University of Victoria’s political science department, said in an interview.

The carbon tax implemented by the BC Liberal government was presented as “a conservative, cost effective, fiscally responsible way of grappling with climate change and reducing emissions,” he added.

But in the decades since, the conversation about climate action policies has shifted far to the right. Canada’s conservative parties have abandoned the carbon tax and most other climate action policies. Many, like the BC Conservatives, question the existence of the climate crisis and whether climate action policies are worth the costs they place on people.

Mary Polak is a former BC Liberal cabinet minister. Like Lake, she served as environment minister and supported the provincial carbon tax. But the climate action policy scene was very different back then, she said in an interview.

“When the carbon tax was instituted, it was not intended to stand on its own, there were a number of other states and provinces that were going to join in,” Polak said. “We anticipated a functioning cap-and-trade system was going to be up and running in a few short years. It didn’t happen.”

Polak said the BC Liberals knew the carbon tax on its own would not be enough to rein in industrial emissions. And it hasn’t. 

Has B.C. reduced its carbon emissions? 

B.C. has legislated targets to reduce greenhouse gas emissions by 40 per cent from 2007 levels by 2030.

The province’s most recent climate accountability report says only very minor progress has been made. B.C. now has less than six years to achieve a 37 per cent emissions reduction to hit its 2030 target. And that’s as the province readies for the biggest fossil fuel boom in its history, with the first liquefied natural gas (LNG) export project, LNG Canada, about to come online.

A recent federal report suggests B.C. is lagging behind other provinces when it comes to curbing emissions. 

Why are politicians abandoning carbon pricing now?

Partly, it’s because many Canadians are concerned about the cost of living, especially as prices for staples like groceries have increased significantly in the past few years. Conservative politicians blame those increases on carbon pricing, even though most Canadians receive more money from carbon tax rebates than they pay in carbon tax.

The message that carbon taxes drive up prices resonates with many people, even if it isn’t true, according to Kathryn Harrison, a professor of political science at the University of British Columbia who focuses on climate policy.

“We would like to believe that a policy that increases the cost of gasoline doesn’t actually work — or that somebody else can fix it or that someone else is to blame,” Harrison said in an interview. 

“In that context, someone saying, ‘Carbon taxes don’t work, it’s costing you a lot of money, don’t worry, we’ll get rid of it’ — it’s a message that’s very appealing to a lot of people.”

Lake, whose politics lean toward the centre of the political spectrum, said liberal governments have not done enough to defend carbon pricing as concerns about affordability increase. 

“You can make a strong argument that people benefit economically from the carbon tax,” he said, suggesting the BC NDP government should have done more “to uphold the argument that you can have your cake and eat it too — you can reduce your carbon footprint and save money.”

Polak agrees. Instead of explaining and defending carbon pricing to people skeptical about its impacts, she said politicians and advocates too often turn to attacks, ridicule and accusations of climate denial.

“You’ve got to explain to people in a respectful way why it’s important to do the things that they’re planning to do.”

She said she doesn’t believe people are suddenly skeptical about climate change. “I think they’re skeptical about the approaches that our governments have taken,” Polak said. “I know lots of people who think that the approaches we’re taking are questionable, but they are certainly not skeptics as far as human-caused climate change is concerned.”

Is the B.C. election going to be a carbon tax election?

Probably not. 

Now that Eby has changed his mind about the tax, the BC Greens are the only party that still supports it — with the caveat it should be transparent and fair.

But voters will face a stark choice as they consider which party to vote for on Oct. 19, especially as the election shapes up to be largely a two-way race between the BC NDP and the BC Conservatives: they can elect a party that says the climate crisis is real and claims it will act accordingly, or a party that denies climate change is a serious issue needing immediate attention. But either way, it appears the consumer carbon tax is out.

The BC Greens, unlikely to win enough seats to form government or become the official opposition, are facing a tough election where voters’ concerns about climate action are eclipsed by worries about the cost of housing and access to health care.

But the party could offer climate-conscious voters hope, argued Jonina Campbell, a political strategist who served as the BC Greens executive director and deputy leader. Campbell said the Greens must offer “very concrete” policies that tackle both affordability and climate change.

“There is a real opportunity to demonstrate that there is a way to create more affordability by investing in renewables like solar — because it’s the cheapest power out there — and by giving people the tools, either through things like a carbon tax rebate or free transit, to reduce their carbon footprint and save money,” Campbell said.

“I think the hopeful path is finding a way to demonstrate how life can be more affordable for people.”

What happens next in the countdown to the B.C. election? 

It may be tough to believe, but the provincial election campaign hasn’t even started yet. It will officially kick off on Sept. 21.

Greaves is bracing for a campaign based more on parties attacking their opponents than on presenting policies to improve the lives of British Columbians.

“I don’t know that we’re going to see an awful lot about substantive policy discussions, both because the BC Conservatives don’t particularly have many and the BC NDP doesn’t particularly want to talk about the policy issues that are not going so well,” he said.

Lake, who said he hasn’t decided who to vote for, hopes to see political parties present credible plans to reduce emissions and prepare for the impacts of the climate crisis.

“We have to recognize that unless we are taking more urgent action now, our children and grandchildren will be far worse off than we are today,” he said. “To say that this is not an imminent threat, is asinine and goes completely against all the evidence to the contrary.”

Even in an election where affordability and health care are front and centre for voters, Lake said it would be catastrophically short-sighted for politicians to ignore the need for climate action.

“People are concerned about climate, but it’s not something that seems to impact them every day — until, of course, they get evacuated from a wildfire or the Lower Mainland gets cut off because of an atmospheric river, wiping out the highway and the bridges.”