Does a Carbon Tax Work? Ask British Colombia

This New York Times article discusses a rather interesting case in what pertains to Green IPE. In 2008, the British Colombia Liberal Party, a right-leaning party in Canada that shares many of the anti-tax, pro-business beliefs of U.S. Republicans that deny the existence of climate change, introduced a tax on the carbon emissions of businesses and families, cars and trucks, factories and homes across the province. Despite remarks by Marco Rubio that government efforts to combat climate change would destroy the economy, British Colombia's provincial economy grew faster than its neighbors' even as its greenhouse gas emissions declined. The tax reduced emissions by up to 15%, encouraged people to drive somewhat less and be more careful about heating and cooling homes, and incentivized businesses to invest in energy efficient measures and switch to less polluting fuels. Moreover, opposition for the tax has decreased from 47% of voters to 32% of voters and businesses found it to be the most efficient, market-friendly instrument available in the quiver against climate change. The province, though, has run into a couple dilemmas. Carbon emissions are rising again since the tax has frozen at 30 Canadian dollars, they're missing their goal of cutting greenhouse gas emissions by a third from 2007 to 2020, and the collapse in gas prices is making people stray away from things like electric vehicles. Moreover, cement makers argue that imports from China and the United States grew from 5% to 40% since the introduction of the tax. It's problems like these that must be addressed in order for United States Republicans to embrace a carbon tax if they ever recognize the threat of climate change.

This article hits on just about all the focal points we discussed in class about Green IPE. The first is the set of market externalities as a result of the trade-offs created from this carbon tax. Reduction in emissions, more environmentally friendly and mindful living, and the potential creation and growth of a new market and economic growth based around new sources of energy is encouraging, but increases in imports in certain industries and gas still being seen as a more economically reliable energy source seems problematic. The Republican party would ask: how does one adopt policies to internalize social costs without stagnating economic growth? Moreover, how does one know how to correctly price carbon, especially when it seems that the tax must keep rising or else people will get used to it and keep emitting carbon? Furthermore, it doesn't seem that historic and current responsibility and the fact that the US has one of the highest emission rates per capita is heavily affecting the direction in policy change. It seems that it comes down, at its purest form, to the fact that if the right wing recognizes climate change as a threat, realizes responsibility, and realizes that reform wouldn't be detrimental to the economy, it would ultimately require states coming together to figure out a plan for reform.