B.C.'s green plan combines carbon trading and carbon tax

March 24, 2008

In November 2007, the British Columbia (B.C.) Legislature enacted initial legislation respecting the reduction of greenhouse gas (GHG) emissions. The Greenhouse Gas Reduction Targets Act, which came into force on January 1, 2008, establishes targets of a 33% reduction below 2007 GHG emission levels by 2020, and an 80% reduction below 2007 emission levels by 2050. It also requires that realistic, economically viable interim targets for 2012 and 2016 be established by the Minister of Environment by the end of 2008, and that the provincial government itself become carbon neutral by 2010.
 

The B.C. government has also announced that additional legislation will be introduced this year to regulate emissions from different sectors. The proposed legislation would establish a cap-and-trade system for large emitters, which would include firm caps on the allowable emissions from large sources, and provide for participation in emissions trading systems. The new legislation would also adopt California tailpipe standards for new vehicles, introduce low-carbon standards for fuels, and provide authority for the regulation and capture of landfill gases.

In February 2008, the B.C. government introduced a provincial budget that included Canada's first broad-reaching carbon tax. The tax, which will come into effect on July 1, 2008, will apply to virtually all fossil fuels, including gasoline, diesel, natural gas, home-heating fuel and coal. It will be phased in over a five-year period at rates based initially on $10 per tonne of carbon emissions and escalating to $30 per tonne by 2012. The carbon tax rate for gasoline will be 2.41 cents per litre effective July 1, 2008 and will increase to 7.24 cents per litre by July 1, 2012. For natural gas, the initial carbon tax rate will be 49.88 cents per gigajoule, increasing to 149.64 cents per gigajoule by 2012. According to the B.C. Minister of Finance, the tax is "revenue neutral" since all revenues will be returned to individual taxpayers and businesses in the form of reductions in other taxes.

B.C.'s Premier Campbell has also been aggressively promoting the development of cross-border cap-and-trade emissions trading. Along with Manitoba, B.C. is a member of the Western Climate Initiative, an alliance of U.S. states that seeks to establish a common cap on GHG emissions and implement a regional emissions trading scheme. The Premier also signed on to the International Carbon Action Partnership at its launch in Lisbon last fall.

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