Time to admit that Alberta’s carbon tax works

Facts show it didn’t get in the way of a growing economy, Joshua Buck says.

The Alberta carbon levy has become a political punching bag for politicians and journalists who want to win votes and sell newspapers. This is very unfortunate as the levy — which has been in place for almost two years now — hasn’t damaged the economy or cost jobs.

What the levy is doing is funding important infrastructure like rural public transportation, light rail transit in Edmonton and Calgary, a 33-per-cent reduction in the small business tax, rebates for Albertans making less than $95,000 per year and the province’s hugely popular energy-efficiency programs.

What is the carbon levy? It is a direct price put onto fossil fuels, such as gasoline and natural gas, that begins accounting for the social cost of carbon, which is the cost to society that carbon pollution brings. Much like how we pay a fee for our waste water and garbage, we now pay a fee for our carbon pollution.

The carbon levy works in two ways. First, as a free-market solution, it imposes a modest fee increase on those products that emit pollution. The idea is to make those products a little more expensive, so that over time, people will choose products and services that are cheaper and lead to less overall pollution. It’s economics 101.

Secondly, it uses the revenue raised to offset costs to lower-income families and invest in solutions for reducing Alberta’s pollution and energy consumption, which will save us even more money in the long run. For example, programs like the Residential No-charge Energy Savings Program will save Albertans over $200 million over the life of the devices installed.

How do we know that the carbon levy is not killing jobs or destroying the economy? We looked at the facts and economic data for 2017, which you can find in Environmental Defence’s recently released report Carbon Pricing in Alberta: A Review of its Successes and Impacts. What we found was that in 2017, the carbon levy appears to have had little, if any, impact on the economy overall.

We looked at key economic indicators for 2017, including gross domestic product (GDP), average weekly earnings, the unemployment rate, and the consumer price index (CPI), in order to determine if the carbon levy had an impact on the Alberta economy.

What we found was that 2017 was a really great year for Alberta’s economy, growing at a rate of 4.9 per cent, the fastest growing economy in the country. Wages were up, unemployment was down, and the CPI, the measurement of how much key goods changed in price, was one per cent, a pretty low number for inflation. The carbon levy did not get in the way of a growing economy.

This report follows data that is publicly available to any person; the conclusion that we reached is straightforward and is supported by economists from around the world who point out that a carbon price is the most efficient free-market tool available in the fight against climate change. All of which is probably why carbon pricing is supported by the Canadian Chamber of Commerce and by the majority of oil and gas companies in Canada.

It is fine to be critical of a new government policy, but what is disingenuous is for critics to offer no alternatives to the carbon levy. And it’s especially disingenuous given that if Alberta repeals the Alberta carbon levy, then the federal carbon price will take its place and Alberta will lose the funding for the popular programs that both help reduce carbon pollution and save Albertans money.

The carbon levy also helps to diversify Alberta’s economy by increasing opportunities in renewable energy, clean technology and other industries. With the international drive to a low-carbon future putting Alberta’s oil and gas future in doubt, the province needs to plan for a diversified future.

The carbon levy is one of the tools that can get Alberta there. It’s clear that carbon levy is working; it’s time for all Albertans to accept this and look forward.

Buck is Alberta climate program manager for Environmental Defence.

What is disingenuous is for critics to offer no alternatives.