Carbon tax bumps up B.C. fuels prices

B.C. residents face another across-the-board increase in fuel taxesin what's become a Canada Day convention.

The province's carbon tax on gasoline, diesel and all oil-based fuels, as well as natural gas and coal, has jumped every July 1 since 2008.

Friday's increase adds another 1.11 cents per litre to gasoline prices and another 1.15 cents per cubic metre on natural gas.

The gasoline carbon tax now totals 5.56 cents on every litre. It will rise another 1.11 cents to 6.67 cents per litre July 1, 2012the last year of the increases in the current legislation.

The purpose of the tax is to encourage energy conservation in order to fight global warming.

Some consider a penny or so more per litre every year a small priceperhaps too smallin the war against climate change, while others suggest B.C. has been fighting alone and it's time to consider a retreat.

Only escalating carbon tax jurisdiction

"The problem for British Columbia is that we are dancing alone: we are the only jurisdiction in North America to levy a broadly-based carbon tax that rises over time," said Jock Finlayson, spokesman for the Business Council of B.C.

"An ever-increasing made-in-B.C. carbon tax isn't sustainable if other provinces and states decline to follow the same path."

Quebec has been charging petroleum companies a carbon tax of just under one cent per litre since 2007 and Alberta forces most petroleum companies to contribute to a government technology fund, but B.C. has North America's only escalating carbon tax.

B.C. introduced its carbon tax as part of former premier Gordon Campbell's plan to legislate cuts to greenhouse gas emissions by more than 33 per cent by 2020.

The most recent statistics provided in the government's Greenhouse Gas Inventory Report indicate the province has a long way to go to meet its reduction targets.

In 2007, B.C.'s total greenhouse gas emissions were 68 megatonnes. In 2008, greenhouse gas emissions increased to 68.7 megatonnes.

Provincial legislation on greenhouse gas emissions reduction sets interim reduction targets of six per cent by 2012 and 18 per cent by 2016.

Prof. Andrew Weaver, a climate expert at the University of Victoria, said B.C. earned worldwide credibility for introducing its visionary carbon tax.

He said he still favours a go-slow approach to the tax, maintaining the current annual increases, to allow business and residents to continue getting used to paying a price for carbon emissions.

Businesses balk

But the business council, one of the largest business organizations in the province, says the tax hurts B.C. businesses.

Finlayson said the carbon tax is unfair because B.C. businesses pay the carbon tax while their competitors outside of the province do not. Although the levy is "revenue neutral," meaning carbon tax revenues are returned to businesses and taxpayers in the form of tax breaks, most businesses still balk.

"The expectations, I think, B.C. had a few years ago was that other jurisdictions, including in North America, would be following suit quite quickly, and so far that hasn't been happening," he said.

But Matt Horne, a climate expert at the Pembina Institute, said some businesses are starting to use the carbon tax to their advantage. He said the University of British Columbia, University of Northern B.C. and the resort community of Whistler have all embarked on energy efficiency projects that have cut their energy costs.

"There are a bunch of projects around the province where the business case is definitely made better because of the carbon tax," he said. "It's an important driver on those projects happening."

He said recent polling indicated British Columbians are supportive of the carbon tax, and there is disappointment among environmentalists that no other North American jurisdictions have followed B.C.'s lead and instituted their own.

There are no scheduled carbon tax increases after 2012. The current government budget forecasts $740 million in carbon tax revenues this year and $950 million next year.