British Columbia’s Carbon Tax

Mainstream economists have for years said the best way to decarbonise economies is through a carbon tax. This is the proposal of Citizens Climate Lobby, a US based global movement to enact revenue neutral, rising carbon taxes in national economies the world over.

But has it been tried in practice? Well the UK has a ‘carbon floor price’, which is widely thought to be pricing UK coal power stations off the grid. But that is a little known tax and it’s not revenue neutral i.e. rebated to households.

The closest thing to a fully rebated carbon tax that has been tried (as of April 2017) is British Columbia’s carbon tax. Begun in 2008, it is still in operation and it’s effect was to reduce fuel use without harming the economy. In addition it was deemed a political success.

The advantages of a revenue neutral carbon tax over the other market based instrument, Emissions Trading, are many. It’s transparent and honest, directly incentivises *all* energy users – consumers and industry – to decarbonise, is economically efficient and does not harm economies. More info on policy comparisons is here.

Read Skimmable Paper on British Columbia’s Carbon Tax

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