Climate and competitiveness in the tar sands

Anytime the oil barons and baronesses are smiling for the cameras with NGOs and politicians, we should at least be interested, if not outright worried. Was the release of Alberta’s new climate change strategy just an occasion for the oil execs to ham it up for the cameras pretending all is well or do they have truly something to be smiling about?

Now, because I don’t want to constantly feel like the asshole at a party—complaining about children ingrates at a baby shower, enumerating an ex-husband or wife’s flaws at a wedding, laughing at a funeral—here’s an important positive: Alberta plans to use half of the money raised by its new broad carbon tax for “just transition” policies. A large chunk of the money will go towards supporting now-more-expensive heating, fuel and other consumption for poor and working families, while some will go towards retraining and other opportunities for those who lose their jobs. Just introducing the phrase “just transition”, which appears in the climate document four times, into the mainstream is a success.

I want to, however, focus on another phrase, much more dominant in the report: “competitiveness”. The report worries about the competitiveness of the tar sands with more stringent climate policies. Oddly enough, in a world of low oil prices, Alberta’s oil industry is already relatively uncompetitive. The biggest recent competing source of “unconventional” oil, fracked oil from US shale formations largely concentrated in North Dakota, has seen huge efficiency gains and falling break-even prices. This means that it is profitable to extract oil there at ever-lower global oil prices. In short, the tar sands are today having hard time keeping up with the pace of innovation elsewhere. Today, the lowest-cost producers of US shale oil can produce profitably at lower oil prices than producers in Alberta’s tar sands.

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Actually making the carbon tax revenue neutral could fund a fair education settlement

As the teachers’ strike continues, the BC Liberals have turned to an old stand-by: fear-mongering that they will have to raise taxes if they are to fund a settlement that includes key demands like class size and composition limits. Ignore the fact that the government has shown itself consistently unwilling to even consider any such settlement; ignore also that there is nothing inherently evil about taxes. Even taking the government seriously here, there’s one source of education funding that the BC Liberals aren’t talking about, the carbon tax.

While debate rages about whether BC’s carbon tax is regressive or progressive, there is another aspect of the tax that has not received enough attention: the carbon tax has been used to actually justify cutting taxes by stealth. Indeed, the additional tax cuts being made under the cover of the carbon tax are estimated to amount to an average of $293 million per year for the next three budgets, according to the government’s own projections. That’s more than enough to fund the projected annual cost of class size and composition limits, projected to be $225 million per year.

The BC Liberals have pushed the carbon tax as a revenue-neutral measure. This means that all the tax collected in the form of the carbon tax is supposed to be offset by tax cuts elsewhere. Whatever our opinion of the carbon tax itself, the government has consistently overshot how much it cuts taxes to make up for collecting carbon tax revenue – and this overshooting has consistently been in the tens and hundreds of millions of dollars, or 10 to 20 percent of carbon tax revenues. Not learning from the past, the government is budgeting overshooting to continue into the future. (more…)

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BC’s resource economy: is it sustainable?

Today’s focus is on British Columbia’s resource economy. Although I’ll be talking about British Columbia in particular, the same issues come up in various guises across North America wherever the large-scale extraction of natural resources is economically important.

My two guests are Marc Lee, Senior Economist with the BC office of the Canadian Centre for Policy Alternatives, and Karen Cooling, long-time labour and environmental activist retired from Unifor. My first conversation with Marc focuses on the current state of BC’s extraction economy, looking in particular at LNG development. In the second part, I speak to Karen about the relationship between unions and the environmental movement in BC, partly from a personal perspective.

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Where’s the tax in BC’s carbon tax?

British Columbia’s carbon tax has been getting some high praise lately. A recent article in the Atlantic called it “the crown jewel of North American climate policy”. Such assessments need some tempering. BC’s carbon tax can tell us important things about the limits of fiscal policy today, which in turn questions the potential it has for fostering significant environmental change.

Tales of the tax’s effectiveness focus on its environmental impacts. Almost six years since its introduction, it is indisputable that the carbon tax has had some impact on resource use and emissions. This is clearly a good thing. There is debate about the extent of this impact and where it is concentrated but it’s there – see these charts.

The carbon tax is presented as not being as problematic as other “market-friendly, eco-friendly” measures such as cap-and-trade. These end up being largely corporate giveaways – new sources of commodification and profit. BC’s carbon tax has been hailed as a policy that rather than giving money back to corporations brings revenue back to the people.

Yet as opposed to those who make the carbon tax out to be an unqualified success, I think any hurrah-optimism needs to be seriously qualified. (more…)

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