Would you support a driveway tax?

News from the Kansas City Star reports that the City Council of Mission, Kansas, has approved a driveway tax.

A driveway tax is simply a fee that charges you based on how much traffic your property produces. Currently in Mission, Kansas, sales and property taxes raise revenue to finance roads. Alas, such revenue has not been sufficient enough to maintain the roads. With the tax, households and businesses are going to share a larger financial burden - the fee is expected to raise $1.2 million a year to help finance $38 million in road improvements during the next 10 years.

"The City Council on Wednesday night approved a new fee charging every homeowner $72 a year and small businesses $3,558 a year beginning in December".

Engineers have calculated that a single-family home generates about 9 1/2 vehicle trips a day. Target Store (virtually ubiquitous across America) generates about 8,500 trips a day. McDonald’s is predicted to produce 2,700 trips.

A driveway tax is not common in the U.S. In fact, the only state that has been progressive with such a tax is Oregon. 18 cities in Oregon have adopted it. This comes at no surprise considering Oregon is more green and progressive in its thinking.

As you could imagine, the newly passed tax has witnessed negative reactions from the business community. Unsurprisingly, they are concerned that in a time when the economy is recovering, the tax would simply hurt small businesses.

Like London's Congestion Charge Zone, these sort of eco-taxes are always jurisdiction dependent; what works in one city might not work in another. A driveway tax may be appropriate for Mission considering that roads there are deteriorating and someone has to pay for them. I agree with Felix Salmon's assessment of this, it is similar to my argument of the BC carbon tax being too low. In short, if a driveway tax is introduced in your city, it should be set at a rate that can actually change behaviour. The formulas predict that the tax will cost 2 cents per trip; that is way too low to bring about any meaningful reduction in driving.

The driveway tax for homeowners in Mission will be $72. This is irrespective of how many trips you do in a day. Thus it is a uniform rate which is problematic because it discriminates against those who drive less, those who bike, take public transit or walk to their final destination. It is understood that the city needs revenue to ameliorate their streets, but those who drive more (produce more traffic from their property) should pay more. It is unfair to discriminate against those who take greener methods of transport.

Those who do take greener methods should be guaranteed some sort of incentive to encourage the continuation of sustainable transport and change behaviour of current motorists. This way, revenue is still being collected while simultaneously changing behaviour and getting people to think about the environment.

Key message: The next decade will see even more green taxes. It's 2010, times are changing and we are going to have to adapt. Creating a win-win for the environment and the economy will require full participation of citizens; this can eventually lead to sustainable urban solutions.

Some thoughts on the B.C. Carbon Tax

On July 1, 2010, British Columbia raised the carbon tax rate on a litre of gasoline by 1.12 cents to 4.45 cents per litre and by 1.27 cents to 5.11 cents per litre of light fuel oil. The carbon tax is now at $20 per tonne of CO2, which marks an increase of $10 per tonne since it was introduced on July 1, 2008.

For a quick refresher on the B.C. carbon tax, see here. In short, it is tax levied on the use of fossil fuels, so as to discourage the production of carbon dioxide.

“During the first two years of the carbon tax, some $848 million has been collected. The corresponding personal and business tax cuts have returned over $1 billion to British Columbians. That is $232 million more returned to British Columbians through tax cuts than was collected from the carbon tax”. -B.C. Government

I have three points that I want to make:

1) The carbon tax needs to be better adjusted to help lower income households adapt. Currently, the B.C. Low Income Climate Action Tax Credit is paid quarterly and provides $105 per adult and $31.50 per child annually to compensate for the carbon taxes they pay. Keep in mind that energy efficiency home retrofits are not cheap. Lower income housholds will only make the changes if they have a compelling economic motivation to do so.

It would be far better if the government gave compensation measures which would provide a greater amount of capital. Compensation measures such as lump-sum redistribution can provide low-income households with a single payment, rather than a series of payments. This can help households make the necessary consumer changes all at once and assist them with budgeting for less carbon intensive products and making more efficient use of energy.

Middle and higher income households are more likely to shift to energy efficient appliances (or to public transit) if they know it will save them money in the long-term. Lower income households live from pay check to pay check worrying more about how to keep their houses warm than how to reduce their household's carbon emissions.

2) According to CBC, the Sightline Institute, a Seattle non-profit research group, found a 10 per cent increase in per capita gasoline sales in the province in 2009, the single largest increase in B.C. in at least 30 years. This seems paradoxical considering the carbon tax was implemented in 2008. This also suggests that the current rate is not high enough. Carbon tax experts like Marc Jaccard have argued that carbon taxes need to hit $200 per tonne of CO2 if the Province wants to achieve its GHG targets. Such an increase will surely change consumer and household behaviour on carbon intensive activities i.e. driving, air conditioning use, home heating etc. Though, that figure is really high and would have serious economic ramifications if phased in too quickly.

3) Corporate and income tax cuts are necessary but equally important is that of investing in public transit, renewable technology and green jobs. The B.C. government has not been very transparent about how it is using revenue from the carbon tax to provide funding for the aforementioned items. Cities like Vancouver and Victoria would benefit immensely from such funding. It would generate more resources for the Greenest City Action Team in Vancouver as Vancouver has aspirations to become the world’s greenest city by 2020. With the amount of revenue coming in from the tax, the sustainbility opportunities --from investing in clean technology and public transit to green roofs and composting-- are extensive and wide ranging.

Key message: The carbon tax has a lot of room for growth in B.C. Let’s start with helping lower income households make the necessary adaptations (such as direct compensation measures) to green their homes.

Some links on the Carbon tax:

CBC Article: http://www.cbc.ca/canada/british-columbia/story/2010/06/30/bc-carbon-tax-increase.htmlB.C.

B.C. Governemnt: http://www2.news.gov.bc.ca/news_releases_2009-2013/2010FIN0040-000788.htm

The Policy Note: http://www.policynote.ca/bcs-carbon-tax-turns-two/

Charging for plastic bags: Hong Kong

It has been one year since Hong Kong introduced a levy scheme charging 50 HK cents (6.6 cents Canadian) per plastic bag. That's right, if you forget to bring your reusable bags to the supermarket, you get charged 50 HK cents for every plastic bag you need. Hong Kong’s levy scheme has been successful as evidenced from the statistics below.

Recent news in Hong Kong confirm the success of the 50 cent charge. The only surprising statistic, which can be both negative or positive (depending on how you look at it) was that the government was expecting to pool in about $200 million from the levy over the course of the year, however, it only brought in $20 million. Obviously, this this can be attributed to the large scale reduction in plastic bag use and the massive increase in reusable bag use.

This news provides a great deal of relief to city officials who have been criticized for their lackluster efforts on waste management. As land is scarce in Hong Kong, there is little space for waste sites and landfills. This continues to challenge city officials as to what approach might be most effective and efficient with dealing with waste. Fortunately, plastic bag use has dropped significantly.

Toronto and Washington D.C. both have plastic bag levy schemes. Washington DC, unlike Toronto and Hong Kong, is clearer as to how they spend the revenue raised from the scheme. For example, Washington D.C. raised $150,000 from their 5 cent levy in January 2010. This money went towards cleaning up the Anacostia River. Thus, environmental remediation efforts in D.C. have been aided by the levy and citizens are much clearer about how the revenue is spent.

Hopefully the government of Hong Kong will be a little clearer as to how they will spend the revenue.

Here is a summary of some of some statistics:

-$19.8 million was the total amount of money collected from the levy between July 2009 and March 2010. This revenue goes directly to the government

-Usage of plastic bags is now far less than before the levy was introduced, with a reduction of 90%

-The number of registered outlets now collecting the plastic bags levy has reached 3,000

Goodbye US Climate Bill, Hello Carbon Tax?...

Barack Obama and the Democrats were sent a hefty blow the other day when, in a surprising turn of events, a Republican nominee was able to win the Massachusetts Senate seat left vacated by the late Edward Kennedy. Having a Democrat win the seat was initially seen as an inevitability, but it was not to be so.

The big talk these days is that this win for the Republicans could sink the huge health care bill currently being put together by congress because this Republican win puts 41 Republicans in the Senate, enough to filibuster any bill.

But the next big ticket item on Obama's agenda is a climate bill in the Senate, which's main component is a cap-and-trade system. Considering how long it has taken the health bills to get this far, most aren't expecting the climate bill -- one barely got through the House of Representatives -- to get too far in the next year. That year-long time frame is very important. In November, the Americans go to the polls for the Midterm elections, where several Senate and House seats are up for grabs. Considering how much popularity Obama (and by association, the Democrats) has lost over his first year, many are expecting the Republicans to gather up most of those seats.

The US climate bill is almost by definition guaranteed to be disliked by Republicans -- to be fair, some are very willing to do something about climate change -- but many Democrats (especially those from the coal-producing states) are opposed to the climate bill. Such contention makes passing the bill especially difficult, and even more so to pass something that will be in any way moderately effective. Indeed, the most optimistic of realists are expecting something very watered down, with multiple exemptions for certain emitters and low emissions reduction targets.

To many, the climate bill might as well be off the table, at least until after the midterm elections. Stephen Hill, a professor at Trent, thinks it could possibly return in a year or so without a cap-and-trade system, but rather a carbon tax. Americans are even less encouraged by new taxes than Canadians, and we all saw how the carbon tax went over here in the last federal election. But interestingly, some of the most environmentally-unfriendly companies in the US, like Exxon-Mobil, are in support of a carbon tax.

To the naked eye, this seems highly unlikely. But these companies see the writing on the wall and some kind of climate-related legislation is bound to come into play relatively soon -- if anything, the EPA will use its power to regulate greenhouse gases. Under a cap-and-trade system the price of carbon fluctuates and businesses can never be too sure how hard it will hit their balance sheets each year. For companies that are huge and have less than impressive carbon emission histories, such fluctuation could be in the hundreds of millions of dollars. A carbon tax, however, is predictable, which is highly valuable to businesses. Moreover, the cost of the tax is borne both by industry and consumers, so businesses don't take as much of the hit. And for the more cynically-minded, it is much easier to influence the price of the tax when the government controls it (see coal, gas & oil lobby) than when the market has control.

But Obama likes the cap-and-trade, and so do the Democrats (for the most part). For now it looks like very little will come about, but who knows about the future? We can only hope the EPA starts to wield its axe or Congress puts something together. I'm not feeling too optimistic about the latter...      

Carbon pricing vs. feed-in-tariffs: How should we really be spurring development of renewables in Canada?

Much praise has been given for Ontario’s Feed-in-Tariff program and its potential to develop renewable power generation to levels comparable in countries like Germany and Denmark, where FITs have also been used. But some have commented that a carbon pricing system (either through a carbon tax or cap-and-trade system) would be far more effective. They are only half right.

They are right because a FIT is very expensive. Indeed, Ontario’s Green Energy Act has allocated $5B over the next five years, much of which will be put towards its FIT program. A carbon pricing system, on the other hand, is relatively cheap to maintain and (if done properly) a revenue generator. These people are also right because it effects traditional energy production, specifically fossil fuel generation like gas, oil and coal. The price of generation of these technologies increases and makes renewables more economically attractive. Moreover, for those with a particular appetite for freedom of choice, it doesn’t let governments pick and choose the technologies it wants. Indeed, the market decides.

In his book, Heat, George Monbiot struggles to find out how renewables alone could supply our current demand for energy. In short, they can’t. A carbon-pricing scheme would make energy conservation more attractive because we’d have to pay extra for wasting energy. Furthermore, even if we can’t get to the energy demand levels required for purely renewable power generation, a carbon-pricing system could make carbon capture and storage technologies economically viable without massive public subsidies.

But they are wrong because a carbon-pricing scheme alone won’t solve the problem of developing renewables. First, if the market has its way, only the cheapest renewables would get built, most likely hydro and on-shore wind power. But several other technologies would get left out in the dust. Solar PV, wave, tidal, offshore wind and even some biofuels wouldn’t be able to compete. This is not to say these technologies are not beneficial, but rather that they are immature. Considering that many in the renewable energy field believe we need a diverse mix of all technologies to properly reap the rewards of renewable energy, a carbon-pricing scheme might leave us with only a few options.

This would be fine if there were moving water and windy areas everywhere. But some places are very sunny and dry, some have massive tidal flows and other places really, really hate wind turbines. Specific technologies need to be brought up to par and sometimes a direct and exclusive financial incentive (ex. A technology-specific FIT) is necessary. And if you’re smart about it, like Ontario is trying to be, you can invest in the technology now and export it to the rest of the world for a nice chunk of change. Look at Vestas in Denmark, for example.

Now, it wouldn’t really matter what technology you picked if the carbon price was high enough. As long as a technology can make some money, it will be put into use. The problem is that we would need some very high carbon prices.

According to a New Energy Finance study mentioned in The Economist, onshore wind requires a carbon price of US$38/tonne to become economically viable without subsidy. This is not an outlandish price. Carbon taxes in some European countries are over US$100/tonne, so it isn’t politically impossible. But before you get too excited, let’s remember that Stephane Dion’s Green Shift platform ran alongside a $10/tonne tax on carbon and it was demolished. Even the relative success story of British Columbia’s carbon tax is fraught with political opposition, and it’s only hovering around the $15/tonne mark these days. The only large-scale attempt at setting a carbon price is the European Union’s Emissions-Trading-Scheme, which has the price set at US$22/tonne. These prices might eventually get around the $40/tonne mark, but that won’t do it for the more expensive technologies. Offshore wind requires a price of US$136/tonne and solar PV US$196/tonne. You want to set a carbon price to make that economically viable? Good luck.

But this entire post has offered us a false choice. What we really need is both a carbon price and subsidy programs. A price on carbon is absolutely necessary, even if it is as small as $10/tonne. It will at least give some indication to industry and consumers so they can include the carbon costs in their accounts. And any revenues taken from it can go towards subsidies. What’s really needed is the political will and more importantly, public recognition and understanding of why a price on carbon is needed and the necessity of renewable energy technologies.

Finally, I’ll end with a piece of advice frequently used by George Monbiot. No matter what we do to help out renewables or fight climate change, it’s all worthless if we keep feeding the fossil fuel industry with tax breaks and subsidies. Monbiot equates it to filling yourself up on fatty, unhealthy foods, but adding a salad and not expecting to gain any weight. But right now, we’re getting pretty fat.

Carbon tax in China...

Refresher: The carbon tax is among several market-based instruments that have the potential to spur incentives to develop and deploy carbon-reducing measures to mitigate climate change. Price increases on carbon emitting technologies can stimulate conservation measures, energy efficient investments, fuel and product switching and changes in the economy’s production and consumption structures.

While I have great hopes for China's rise in the 21st century, I am also somewhat dubious about their air pollution and environmental status. China`s economy is growing rapidly and this growth suggests that it will be one of the biggest economic giants of the world by 2030. With tremendous economic productivity, technological innovation and population growth, the country has numerous competitive advantages. However, air pollution and environmental degradation will do the country some severe harm and have multiple health implications. Air pollution for one can impede industrial productivity in the sub-urban areas due to health issues that the workers endure. Workers become ill and hence less productive. As factory workers learn more about air pollution issues, who knows how thing will turn out in these sub-urban areas.

In China, 200 million houses are going to be built with bricks in rural areas in the coming 30 years. Using bricks will take 25% of the top layer of the agricultural land and half of the coal reserves of the country to actually make these bricks. These industrial processes will spew out an abundance of carbon emissions and worsen its air quality, particularly smog.

The coal fire power plants (one of their greater sources of energy) are also vehemently condemned by the international community. While incredibly lucrative for China, they pose health issues for many of its citizens and contribute to an egregious carbon footprint globally. So, how can they resolve their air pollution and carbon emission crisis? Do you think a carbon tax would work for this nation? For a critical economic and environmental analysis on this issue, take a glance at this post courtesy of the marginal revolution.

Waste diversion programs are not cheap…

but we could be paying for them partially through revenue from landfill tipping fees. Within the past two years, the city of Toronto purchased the Green Lane Landfill in St. Thomas, Ontario for $220 million. A worthy investment considering that projected capacity is until 2034 (under current waste consumption patterns). Because the landfill has a decent capacity, and with the augmentation of waste diversion programs like composting, recycling and waste education, the city should institute a landfill tax also known as tipping fees.

Landfill tipping fees are fairly common in the U.K. and certain U.S. states like California. Tipping fees are like a tax levied in units of currency per unit of weight or volume; for example, $/yard or $/kg or $ $/tonne.

Toronto currently has no tipping fee policy but by introducing one at the Green Lane Landfill it can potentially induce more waste reduction efforts, resulting in a total decrease in the flow of waste sent to the landfill. Why landfill tipping fees? The main impetus for this policy would be to control and price external waste which could offset the city’s own waste management costs. For instance, through establishing a tipping fee to external users or municipalities, it could cover the landfill operating costs such as land taxes and property fees, environmental monitoring costs like repairing liners to prevent groundwater contamination, and service costs to offset payments for employees who work at the landfill.

Operating a landfill is costly especially one that collects waste from the city of Toronto. The city should not merely invite hundreds of municipalities across the region to use the landfill however, those currently using the landfill should be subjected to tipping fees based on how much waste they bring.

On the waste conservation side, having a tipping fee in place could provide a stronger incentive for external municipalities to reduce waste and reduce costs. In other words, let's say that Toronto’s tipping fee is set at a price such as $35/tonne of waste. This fee can act as an incentive for users to send less waste to avoid such a financial burden. Of course, this would mean that municipalities can simply use other landfills in the region that do not have such tipping fees. However, as waste management becomes even more of a salient issue, we may witness a good provincial policy decision to bring about legislation that require all landfills in Ontario have a tipping fee in place.

Toronto can benefit tremendously by charging these external users a designated tipping fee which can help offset some of its annual waste management costs. If municipalities continue to send their waste to the landfill because it is simply more convenient and efficient to do so, then Toronto can consider raising its tipping fee which can provide additional revenue to fund increased waste diversion activities.

Toronto’s waste diversion rate is hovering around the 60% mark and this can increase with more funding (which we know is limited right now). For instance, increased revenues can be directed towards Toronto’s Greenbin composting program, blue box recycling program or even for consumer education, teaching consumers about the merits of conservation and waste reduction effort.

The city has a goal of 70 percent solid waste diversion from landfill by 2010. Achieving such a rate would extend the life of the Green Lane landfill until 2034. However, waste diversion programs would require more funding in the range of $50 million annually to achieve this goal. While landfill tipping fees are not the be all end all solution to this, they can surely help raise some revenue to achieve the city's goal of 70 percent solid waste diversion from landfill by 2010.

Key message: Landfill tipping fees can provide Toronto with more economic flexibility when it manages waste diversion and provides waste consumer education. It can also discourage municipalities to send their waste to the landfill because of the exorbitant tipping fee in place.

User Fees… The best option municipalities face right now?

Over the course of the year, I had the opportunity to explore user fees in various municipalities in Southern Ontario. I did research through my Waste Management and Public Policy classes and learned a tonne about their theory, implementation and widespread use. Most of the work I did was on municipal waste management and why cities should stop using property taxes for waste collection and why we should alternatively introduce a user fee system for conservation purposes, economic opportunity and optimal efficiency.

Looking at a user fee system for waste management would require city taxpayers (residents, companies, businesses) to pay for the pick-up of general waste based on volume or weight rather than through general tax levies (property tax) that are unrelated to quantities of household waste. They are great systems because they are flexible and allow the household to set out one or two bags for free before being charged for collection. This will of course depend on the municipality but generally there is some leeway. For those not familiar with these systems, the economic rationale for user fees is that by attaching a cost to each bag of garbage a household produces, the economic incentive will encourage householders to recycle more and to reduce the amount of waste they produce. And due to the cost involved, the household would theoretically re-think how much waste it produces.

Hundreds of municipalities across Canada including Toronto rely on property taxes for financing residential waste management costs. Ostensibly though, Toronto has introduced some user fees for its waste and has seen waste management costs and volume go down by as much as 15%. One advantage of financing a city’s waste management system through property taxes is the low administrative requirements that accompanies this and it also provides a secure and predictable revenue stream for the city. But again, the argument, which I vigorously support, is that property taxes are a general tax that does not affect demand for municipal services. In other words, property tax systems may lack a cost incentive to reduce the total amount of waste a household generates because residents can continue to produce waste and pay their taxes at a fixed rate.

A user fee system can replace a property tax mechanism thereby sensitizing residents about their waste generation practices and providing them with an incentive to reduce and divert waste. When there is a direct cost involved for each garbage bag a household creates, the household will have a better understanding of the actual costs of waste. As an example, Peel has become the largest municipality in Ontario to adopt a user-pay three bag system where the first three bags of garbage are free. The city charges $1.00 a bag after that. In 2005 alone, Peel generated 442,015 tonnes of garbage under a two-bag limit, diverted 60 percent of its waste from landfills through recycling, reusing and cutting down on household waste production.

Toronto’s waste management workers are currently on strike. What does this mean for the city? It means mounting frustration, chaos, diffusion of municipal and civic responsibility and a wake-up call to our extravagant and consumerist lifestyles. Maybe a strike will provide us with the realization that we generate too much waste. Maybe we will have to re-think our waste management and turn to user fee systems which are environmentally and economically smarter. Could this strike act as an impetus to explore user fees in more depth?

Key message: User fees can relieve pressure on municipal property taxes and ultimately reduce the quantities of waste requiring disposal. This means less waste being sent to landfills which we know have numerous environmental health implications.

Gee is a critic of Toronto’s new 5 cent plastic bag charge…

Marcus Gee, an international affairs columnist for the Globe and Mail, recently wrote an article criticizing Toronto’s new bylaw requiring all grocery stores to charge 5 cents for plastic bags. He writes “There is more sanctimony than sense behind this rule, which took effect Monday and which will require even the hard-pressed corner store guy to post signs explaining the five-cent charge.”

Other critics like Gee, also mention how plastic bags are recyclable and reusable anyway and serve multiple purposes. Marcus argues that they are especially useful for lining garbage bins. He thinks that we will have to buy plastic bags anyway whether from a grocery store or from another vendor to serve these various functions. One part of his article that is particularly irksome, erroneous and ill-informed is his discussion over landfills and waste diversion. “Modern landfills are marvels of environmental management that have next to no impact on the land around them. Impermeable, high-tech membranes prevent liquids from escaping into the groundwater. Methane is funnelled off and burned to produce electricity. “

Firstly, all modern landfills constitute “hazardous industrial waste landfill” and can be technical and scientific and therefore be exclusionary and esoteric to the general public. There are still a lot of uncertainties surrounding their impacts on groundwater, water quality and the environment generally. Further, they take up vast amounts of space, have no element of sustainability and produce a lot of social and environmental injustices. Additionally, many environmental law cases in Ontario deal with the controversies over landfills. The odour from the landfill site can permeate local farms and residential areas. Landfill odour can constitute a nuisance and unreasonable interference. It endangers life and health. Citizens have a lot of causes of actions (torts) that they can use for this very reason to sue and condemn the use of landfills.

Now, in terms of charging for plastic bags (something Gee thinks is preposterous), there are many benefits. In short, considering the number of shoppers in the metropolitan area, a five cent charge can induce citizens to change their behaviour. In addition, a user charge can persuade citizens to make the investment in buying reusable bags which are sturdier, compact and can carry a higher volume of groceries.

All the revenues collected from this five cent shopping bag charge will accumulate in the store’s budget, and it is expected that the money will be used for environmental projects. Again, “environmental projects and or funds” is quite nebulous. However, there can certainly be more regulation here whereby the municipal government monitors how these stores use their revenue. The biggest criticism of the 5 cent charge should not be its futility, but maybe how the 5 cents will be used. Economically, it makes sense. Chris and I both did some quick math on this in a previous post which you could see here.

Toronto wants to achieve a 70 percent diversion of waste from landfills by 2012. This is feasible. And achieving this will require a serious cut down on those ubiquitous disposable coffee cups, higher rates of composting, recycling and user charges like the 5 cent plastic bag fee. Regulatory measures are also significant for waste diversion and if the implementation of a bylaw reduces total waste generated, then a 5 cent charge certainly has merit. Marcus Gee may not approve of these various initiatives but they are all indispensable for achieving a higher waste diversion rate.

Key message: The real goal of such a bylaw is to promote sustainability through the use of reusable bags. Charging a small fee for plastic bags gets people thinking about the environment and provides an inclination and incentive to either consume less or make a switch to reusable bags.

Charging for plastic bags...

A Toronto bylaw starting June 1st, 2009 will require all stores under the Canadian Federation of Independent Grocers (CFIG) to bring about a 5 cent charge on plastic bags, meaning every plastic bag the store provides you, you pay 5 cents for. This would take effect in Toronto malls, retail stores, supermarkets and corner stores. The CFIG, representing over 4,000 stores has expressed a reluctance to get involved with the city plan because of the fear that grocery stores may lose customers. Toronto’s plan is to reduce plastic bags by 70 percent by 2012. Ambitious? Yes! Is it actually achievable? Depends on what kind of policy tools are used.

Several stores have already taken the initiatives to implement the 5 cent charge on plastic bags including No Frills and Price Chopper. The rationale of the 5 cent charge is to induce citizens to change their behaviour to cut down on their use of plastic bags. In general, a user charge can persuade citizens to make the investment in buying reusable bags which are sturdier, compact and can carry a higher volume of groceries. The revenue collected from this nominal charge will accumulate in the store’s budget, and it is expected that the money will be used for environmental projects. Sounds pretty nebulous to me.

I think this collaborative initiative between the city and the CFIG is remarkable, however, 5 cents is far too small. For example, let’s say a citizen buys $100 worth of groceries from Loblaw’s, and decided to use 10 plastic bags to carry their groceries from the store to their car. This would translate to 5 cents * 10 plastic bags/$100 worth of groceries. Folks, that means the total revenue from the bag charge is 50 cents. That is nothing. In other words, using 10 plastic bags at five cents each for a $100 grocery bill will only contribute fifty cents to the ostensible environmental projects and initiatives, whatever they entail.

What I suggest: Citizens need an economic incentive. Market-based instruments like rebates are highly advantageous. This would involve the industry or store to provide a rebate or refund of ten cents for every reusable bag brought in by the citizen. Although this would be difficult to regulate, it shows more responsibility from the company and provides the citizen with an economic incentive to be green. Additionally, the CFIG should be more resourceful seeking funding from the city and province so that they can invest money into biodegradable bags which would give citizens the option of using biodegradable bags or using a reusable bag. This way, virtually no waste is produced.

Key message: Similar to many of the conventional arguments put forth regarding carbon taxes or user charges on garbage, a small charge may not induce desired consumer behaviour. Increase the charge to at least 20 cents on plastic bags while concomitantly providing educational workshops on waste diversion, rebates to citizens who bring in their reusable bags, and the city can provide awards for environmental stewardship to recognize the company’s outstanding commitment to environmental protection.

British Columbia's Carbon Tax...

Ever since BC introduced its Carbon Tax way back in July 2008, it has faced a lot of opposition and disapproval. The government of BC has made it explicit that the carbon tax is forecasted to generate an estimated $1,849 million over three years. This number is being bashed left, right and center from carbon tax opponents around the country. Some of the more common arguments are that it is a "tax grab" and that it negatively impacts consumers and lower income residents who are disproportionately affected by it. For those unfamiliar with BC's carbon tax, here's a quick synopsis of it. The tax is currently enacted in British Columbia’s legislature, it taxes carbon-based fuels including natural gas, diesel, gasoline, and home heating fuel at a rate of $10 per tonne of greenhouse gas emissions generated. The tax is revenue neutral. Revenue neutral is when you set higher taxes for things that are bad like pollution, and corresponding reduce taxes on things like income and businesses, which are good for the economy.

Ostensibly, the Climate Action Credit is not even adequate enough. This credit is meant to help lower-income and working families and provide them with an annual payment of $100 per adult, and $30 per child per year. This initiative is designed to provide credit to offset the cost of the tax and encourage households to use the credit for energy efficiency, home retrofitting and vehicle fuel costs, but it cannot be guaranteed that the money will go towards these activities. Heck, even the NDPs of BC have complained and stated that the tax will force cuts to vital health services, as Ambulance costs are projected to rise.

Amidst this whole carbon tax debate, industries and households are criticizing each other over who emits more carbon. Industries "need" to continue producing in order to maintain competitiveness. They claim that the carbon tax will damage their profits and in turn affect the domestic economy. In short, they are not happy. Residents of northern British Columbia are particularly discontented with the tax, stating that because they rely more on automobility and home heating, the costs will be exorbitant and financially burdensome.

A couple of solutions to this problem and ideas from Europe: 1) introduce compensation measures. Compensation measures use part of the fiscal revenue from the tax, to compensate those most affected by it. Compensation measures such as lump-sum redistribution to the population can alleviate the negative impacts on low income households. Lump-sum redistribution can provide low income and average families with a single payment, rather than a series of payments. This can help households make the necessary consumer changes all at once and assist them with budgeting for less carbon intensive products and making more efficient use of energy. However, this can only happen with regulation. 2) require industry to introduce less emitting technologies that could compensate industrial polluters for additional abatement costs.

In other words, the government can help industry pay for technological improvements so less carbon dioxide is emitted. Also make them invest a portion of their income into research and development in renewable energy and energy efficiency to mitigate total carbon dioxide emissions. Partial exemption to the industries of British Columbia could also spur investment for research and development, thereby maintaining competitiveness and forcing industry to adopt more environmentally friendly practices.

I did extensive research on BC's carbon tax for my public policy class. These are just a few ideas.

Marc Jaccard on the Carbon Tax

Mark Jaccard is Professor of Resource and Environmental Management at Simon Fraser University. He is one of Canada's leading experts on climate change policy. This is his take on the carbon tax