This research note is based on a paper (Jobs and Climate Policy: Evidence from British Columbia’s Revenue-Neutral Carbon Tax)
written by Akio Yamazaki, PhD Candidate, University of Calgary.
In 2008 the government of British Columbia (BC) implemented North America’s first revenue neutral carbon tax. It raises revenues from taxing the carbon content of fossil fuels, and redistributes the revenues back to residents of BC through reductions of other taxes, such as personal and corporate income taxes, as well as lump-sum transfers to low- income households.
A recent report1 showed that the per capita use of fossil fuels in BC has declined by 17% during the first four years following its implementation, which is 19% more than in the rest of Canada. Similarly, the per capita greenhouse gas (GHG) emissions have declined by 10% in BC from 2008 to 2011. Thus far, the BC carbon tax appears to be fulfilling its purpose.
However, critics have questioned the impact of BC’s carbon tax on employment. This research note explores the employment effects of the BC carbon tax.
The effect of the BC carbon tax on employment differs significantly across industries as it depends on how much energy each industry uses, and how sensitive the market demand response is for each industry.
Although there are winners and losers from the BC carbon tax, aggregate employment in the province increased since its introduction in 2008.
Understanding the effect of the BC carbon tax on employment across different industries could help design a future climate policy in BC and other jurisdictions.