by Bryan Roh
Innovation. It is a word that has been consistently appearing in almost every federal science policy document in Canada since the 1980s. Today, the Trudeau government continues the tradition of championing innovation by interweaving this term with its climate action goals as it attempts to sell the idea of a new federal carbon tax to the Canadian public. The federal government uses the 2008 provincial carbon tax implemented in British Columbia as its model, and for good reason: B.C. has received international acclaim for producing an innovative approach to reducing carbon emissions. Indeed, Angel Gurria, the Secretary-General of the OECD, stated that B.C.’s carbon tax was “as near as we have to a textbook case” of carbon pricing.
On November 5th, 2018, the Hon. Gordon Campbell, the former premier of B.C. from 2001-2011, was warmly welcomed by the Interim Director of the Munk School of Global Affairs & Public Policy, professor Randall Hansen, to speak at the George Ignatieff Theatre on his experiences leading B.C. to introduce the first revenue-neutral carbon tax in North America and the challenges of transforming innovation into action. Sachin Aggarwal, a senior fellow at the Munk School, was the moderator while Carolyn Tuohy, professor emeritus at the Munk School, delivered the concluding remarks.
Towards Revenue-Neutral Carbon Tax
Mr. Campbell stated that his drive to implement a carbon tax in British Columbia materialized when he visited Beijing in November 2006 on a hazardous air day – when the air quality index measures the number of pollutants in the air at its highest. “What that really brought home to me was how each of our individual actions has an impact on the world that we live in”, he recalled.
Mr. Campbell would later call the former Governor of California, Arnold Schwarzenegger, and mutually agree that British Columbia and California must take the first step towards filling in the leadership vacuum left by their respective federal governments on climate action. In February 2007, California along with four other American states launched the Western Climate Initiative (WCI) to create a cap-and-trade system for greenhouse gas emissions produced within their respective borders. Shortly afterwards, British Columbia joined the WCI in April 2007, setting an example for the other Canadian provinces to follow in its footsteps. By mid-2008, Manitoba, Ontario, and Quebec joined the WCI.
It was amidst this context that the B.C. government, under the leadership of Mr. Campbell, launched its famous Carbon Tax Act in July 2008. As Mr. Campbell stressed in his speech, however, B.C. was not the first province in Canada to implement a carbon tax. That title goes to Alberta, when in 2007 it passed the Specified Gas Emitters Regulation, an amendment to its 2003 Climate Change and Emissions Management Act.
What distinguishes B.C.’s carbon tax from Alberta’s, Mr. Campbell explained, is that it was Canada’s first revenue-neutral carbon tax. Under the Carbon Tax Act, the revenue generated from the carbon tax must be recycled into B.C.’s economy in the form of tax reductions instead of being used to fund government programs. For individuals, it means that the additional costs they pay from the carbon tax is balanced by cuts in their income tax. For businesses, it means the additional costs incurred from the carbon tax is offset by cuts in their corporate tax. The B.C. government is legally obligated to present a plan to the provincial legislature each year on how it plans to balance the carbon tax revenue with corresponding tax reductions.
Ultimately, the principle behind the B.C. carbon tax was straightforward: let the free market decide on the issue of carbon emissions reduction. With the added incentive of receiving rebates, the question for British Columbians thus came down to how much they valued their carbon usage as consumers and businesses. If people were willing to change their behaviour by finding alternatives to activities involving carbon usage, they would generally be paying less taxes and reducing their carbon footprint simultaneously. “What we’re saying to you is ‘make your own choice’”, Mr. Campbell summarized.
Innovation: Easy to Say, Hard to Do
One of the key themes Mr. Campbell discussed in his talk was the difficulty of transforming innovation into action. This challenge stems from what he identified as one of the adverse forces that are holding Canada back from progress: “the tyranny of the status quo”. This tyranny is maintained by various factors including the difficulty people have of thinking long-term, the propensity for people to double-down on their own beliefs over conflicting evidence, and the fact that there are certain actors who benefit from the status quo and do not want to see it change.
Innovation, then, must be seen not as an idea but rather a process. It doesn’t simply end with the creation of a new ‘disruptive’ or ‘groundbreaking’ concept. For businesses, that means innovation is done when the new ideas are taken to market. And for governments, it means innovation is done when new ideas are translated into public action. Simply announcing that innovation will occur or is occurring, Mr. Campbell argued, is insufficient.
What, then, are Mr. Campbell’s personal recommendations for overcoming the tyranny of the status quo in favour of progress? In his concluding speech, he provided some recommendations to consider from his experiences. The first is to have the courage to lead by setting an example for others to observe and follow. This entails not preaching to people on what they should do, but instead showing what actions have already been taken. The second, to recognize the importance of “disenthralling” ourselves from the status quo by “reimagining what we want to be”, which involves “igniting the imaginations of Canadians of what they want in their country and provinces”.
For the B.C. government in 2008, they once imagined that their revenue-neutral carbon tax could be exported as an innovative new model to combat climate change. A decade later, that imagination is now set to become reality.
Bryan Roh is a Master of Public Policy candidate at the Munk School of Global Affairs & Public Policy and a candidate in the Collaborative Master’s Specialization in Contemporary East and Southeast Asian Studies at the Asian Institute. His research interests are mainly on national and international security issues, particularly in the Asia-Pacific region.