British Columbia’s revenue-neutral carbon tax: A review of the latest “grand experiment” in environmental policy

British Columbia’s revenue-neutral carbon tax: A review of the latest “grand experiment” in... In 2008, British Columbia implemented the first comprehensive and substantial carbon tax in North America. By 2012, the tax had reached a level of C$30/t CO2, and it covers about three-quarters of all greenhouse gas emissions in the province. This paper reviews existing evidence on the effect of the tax on greenhouse emissions, the economy, and the distribution of income, and provides new evidence on public perceptions of the tax. Empirical and simulation models suggest that the tax has reduced emissions in the province by between 5% and 15% since being implemented. At the same time, models show that the tax has had negligible effects on the aggregate economy, despite some evidence that certain emissions-intensive sectors face challenges. Studies differ on the effects of the policy on the distribution of income, however all studies agree that the effects are relatively small in this dimension. Finally, polling data shows that the tax was initially opposed by the majority of the public, but that three years post-implementation, the public generally supported the carbon tax. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Energy Policy Elsevier

British Columbia’s revenue-neutral carbon tax: A review of the latest “grand experiment” in environmental policy

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Publisher
Elsevier
Copyright
Copyright © 2015 Elsevier Ltd
ISSN
0301-4215
D.O.I.
10.1016/j.enpol.2015.08.011
Publisher site
See Article on Publisher Site

Abstract

In 2008, British Columbia implemented the first comprehensive and substantial carbon tax in North America. By 2012, the tax had reached a level of C$30/t CO2, and it covers about three-quarters of all greenhouse gas emissions in the province. This paper reviews existing evidence on the effect of the tax on greenhouse emissions, the economy, and the distribution of income, and provides new evidence on public perceptions of the tax. Empirical and simulation models suggest that the tax has reduced emissions in the province by between 5% and 15% since being implemented. At the same time, models show that the tax has had negligible effects on the aggregate economy, despite some evidence that certain emissions-intensive sectors face challenges. Studies differ on the effects of the policy on the distribution of income, however all studies agree that the effects are relatively small in this dimension. Finally, polling data shows that the tax was initially opposed by the majority of the public, but that three years post-implementation, the public generally supported the carbon tax.

Journal

Energy PolicyElsevier

Published: Nov 1, 2015

References

  • The effect of carbon taxes on agricultural trade
    Rivers, N.J.; Schaufele, B.
  • The SO2 allowance trading system: the ironic history of a grand policy experiment
    Schmalensee, R.; Stavins, R.N.
  • Excess benefit
    Tullock, Gordon

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