British Columbia Carbon Tax Case Study

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A carbon tax was introduced in British Columbia in July 2008 at C$10 per ton of CO2 equivalent emissions, rising by C$5 each year until it reached C$30 a ton in 2012. The base of pricing covers nearly all fuels, including propane, natural gas, gasoline and coal. The government of British Columbia estimates it could reduce emissions by up to 3million tons annually and by 33 percent of greenhouse gas emissions by 2020.
A strong and predictable price on carbon will lead to effective environment and provide new fiscal revenues.
First, the carbon tax has a great effect on emission reductions for the purpose. It is considered as the most economically efficient way to tackle the greenhouse gas market failure. 6 years of having implemented the carbon tax, the consumption of fuels per person in B.C dropped by 16.1%. Comparing it risen by 3% in the rest of Canada, this figure may suggest a remarkable improvement to emissions mitigation.
Second, new revenues from the carbon tax can be used to reduce or offset the economic costs of a carbon pricing, and even potentially can be recycled through the whole economy. The policy can encourage employment and investment by cutting labor and corporate taxes. In British Columbia’s case, every dollar from the carbon tax revenue must, by law, be revenue-neutral and be …show more content…

In practice they are not that significant, however, or even they can generate revenue that can be rebated to consumers or used to lower other taxes. According to the research from the Intergovernmental Panel on Climate Change (IPCC), economic growth is only slightly affected by the efficient climate policies; for example, the estimated costs of just 2°C of global warming would be of the order of 0.5–2% of global GDP by 2030. It means reducing emissions by 20% would cost less than 1% of economic growth, which is not

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