Public Policy: Emissions Pricing and Affordability: Lessons from British Columbia

School of Public Policy
University of Calgary

EMISSIONS PRICING AND AFFORDABILITY: LESSONS FROM BRITISH COLUMBIA

How does emissions pricing affect affordability in Canada? BC, with the longest-running carbon tax, offers some lessons.

Some blame emissions pricing for increasing costs and decreasing energy affordability. Concerns about affordability in Atlantic Canada even prompted the Government of Canada to exempt heating oil from the federal fuel charge until March 31, 2027.

Emissions pricing affects households’ costs in two ways. First, it directly increases the price of fuels based on the amount of CO2 emitted as they are burned. The 2023 price is $65 per tonne, which translates into 14.3 cents per litre of gasoline and $3.32 per GJ of natural gas. Second, increases in the price of fossil fuels gasoline, diesel, natural gas, heating oil etc. trickle through the supply chain, indirectly raising the price of goods and services across the economy and so increasing households’ costs.

The effect of emissions pricing on the prices of goods and services can be measured using the effective tax rate: the ratio of carbon taxes paid to total expenditure on a specific product. It includes both direct and indirect costs, meaning it shows the full burden of the tax relative to its absence.

For most goods and services, BC’s carbon tax of $65 per tonne adds less than 0.3% to the cost.

The figure uses the latest estimates from Statistics Canada to calculate BC’s effective carbon tax rates for a range of goods and services. From a high of 0.9% for relatively energy-intensive air transportation to lower than 0.12% for insurance and financial services, the figure shows how necessities like food or clothing and footwear are increased by the province’s carbon tax by 0.33% and 0.2%, respectively.

While some politicians and policymakers are blaming emissions pricing for high costs of living, the figure shows that the actual effect is quite modest for most items.

Editorial Practices Statement: This manuscript is a rapid contribution to the policy conversation that has been open-reviewed by at least one University of Calgary faculty member prior to publication.

DECEMBER 2023

Emissions pricing is just one of many indirect taxes that households face. Other examples are sales taxes and alcohol levies. We estimate that the combined effect on Canadian consumer prices from all indirect tax increases between January 2015 and October 2023 was 0.6%.

Knowing that much of the present affordability crisis is due to factors other than emissions pricing, the elimination of the carbon tax is unlikely to solve the problem. As Canada slowly recovers from high inflation in 2021 and 2022, policy makers will need to consider alternative solutions.

Latest posts

In the morning of August 31, Egyptian journalist Hossam el-Hamalawy received an email from Immigration, Refugees and Citizenship Canada (IRCC), informing him that it had made a “u-turn” and reversed its decision to deny him entry to Canada.

The reversal came in response to a coordinated solidarity campaign that successfully pressured IRCC, Canada’s department of immigration, to change course.

Almost two weeks earlier, on August 18, IRCC rejected el-Hamalawy’s application for an Electronic Travel Authorization (eTA), which is required for German citizens to visit Canada. An Egyptian exile and refugee, el-Hamalawy resides in Berlin and has German citizenship. His eTA application was to attend two public speaking engagements in September at Simon Fraser University in British Columbia, Canada.

IRCC initially rejected el-Hamalawy’s eTA application after requesting three times that he provide official documents from the Egyptian government that corroborate his experience of detention and torture under the regime.

In Toronto, the Executive Director of REDWORD.ca, Mostafa Al-A’sar, prepared an open letter to Minister Diab signed by prominent labour leaders, journalists, and human rights activists, including Mostafa Fouad, Executive Director of HuMENA for Human Rights; Ehab Lotayef, founding member of Egyptian Canadian Coalition for Democracy; Judy Rebick, feminist and journalist; and Sid Ryan, former President of the Ontario Federation of Labour.

Other activists launched an email campaign, which encouraged supporters to send letters to Minister Diab and her Parliamentary Secretary, Liberal Member of Parliament Peter Fragiskatos (London Centre), as well as their own Members of Parliament. Letters were sent from across Canada, including Halifax, Nova Scotia (Diab’s home riding) and London, Ontario (Fragiskatos’s home riding). Activists in the United States, Britain, and Europe also shared the email appeal.

In addition to the appeal, activists organized two emergency phone actions, which delivered over 200 voicemail messages to Diab, Fragiskatos, and dozens of Members of Parliament.

Finally, on August 31, Jenny Kwan shared her own open letter to the Minister, which echoed all the demands of the solidarity campaign.

*Click image or link to read the article - https://springmag.ca/international-solidarity-works-hossam-el-hamalawy-wins-entry-to-canada

My open letter to Immigration Minister Lena Diab requesting urgent intervention to facilitate entry into Canada for Hossam el-Hamalawy.  

Mr. el-Hamalawy is an award-winning Egyptian journalist, scholar, and human rights advocate who fled persecution in Egypt and is now a German citizen living in exile. He was invited by faculty at Simon Fraser University (SFU) to give two academic lectures this September. However, IRCC denied his Electronic Travel Authorization (eTA) after demanding documentation from the very Egyptian authorities responsible for his past detention and persecution—putting him in an impossible and unsafe position.  

It is deeply problematic to expect political exiles to seek papers from the regime they fled. Canada must stand up for human rights, academic freedom, and freedom of the press. I am calling on Minister Diab to use her discretion and immediately reconsider this decision so Mr. el-Hamalawy can share his scholarship at SFU.  

Are you ready to take action?

Constituent Resources
Mobile Offices
Contact Jenny

Sign up for updates