A Case Study of British Columbia’s Carbon Tax

June 2021
Eli Levine

In the face of the urgent and growing climate crisis, policy experts on climate and the economy have pushed for national and other governments to implement a tax on carbon. The Biden administration is considering adopting such a policy (Green, 2020), and Canada adopted a nation-wide tax in 2018. Despite the current level of interest in carbon taxation, there is little literature that reviews the impact of long-standing existing carbon taxes on the economy and carbon reductions. The expectation is that a well-designed carbon tax will substantially reduce carbon emissions in its target jurisdiction without severely impacting the overall economy.  This paper examined the 2008 British Columbia (BC) carbon tax for a 10-year period (2008-2018) and assessed whether it had noticeable effects on reducing carbon emissions and how it impacted the local economy. Regional green-house gas emissions data, regional GDP and population data, and the stock value of representative companies of British Columbia were compared to the results of the combined rest of Canada. Ultimately, it was found that the British Columbia carbon tax did not price carbon emissions aggressively enough since emissions remain at 2008 levels despite going down in the rest of Canada. It was also found that the tax did not have noticeable effects in the regional wealth of British Columbia or representative private companies, as they performed similarly to the rest of Canada during this period.