Last week the governments of Oregon, Washington, California, and British Columbia gathered in San Francisco and entered into an agreement to cooperate on the development of a clean energy economy. Although, short on specifics, the idea is to use policy levers such as carbon taxes and some kind of cap-and-trade system to reduce greenhouse gases. Given, that B.C. already has a well established carbon tax, I thought this was a significant positive step for BC for a number of strategic reasons.
I think its pretty certain now that B.C.'s carbon tax has survived through its adolescence and will be with us now for the long term. The carbon tax was controversial when it was first introduced and it was not clear it would last. The opposition NDP originally came out against the tax. Furthermore, the HST, which was also introduced by the Campbell government was soundly rejected by B.C. voters.The fact that the BC carbon tax, which has now withstood the test of two elections, is now the centrepiece of an international agreement with our neighbours to the south is a strong indicator that it is here to stay.
Although the BC government has committed to keeping the carbon tax, they have also postponed any increases to the tax for the time being. This was a smart move because, in order for our economy to bear the cost of the carbon tax, we cannot afford to let the carbon tax make B.C. uncompetitive in the international arena. This is what recently happened in Australia where their carbon tax made it difficult for resource industries to be competitive with their Asian neighbours. A federal election was fought largely on the issue of the carbon tax just a few weeks ago with the victorious Tony Abbott promising to kill the tax. If B.C.'s carbon tax is to be affordable in the long term, we need to make sure our trading partners adopt similar policies. The agreement signed recently in San Francisco is an integral part of that process.
Finally, ensuring that carbon is priced in our trading markets, especially North American ones, will ensure that B.C.'s carbon free resources are properly appreciated in international markets. Among existing assets, our large hydro generation plants provide massive amounts of carbon free electricity that can be exported. Looking forward into the future, B.C also has tremendous renewable energy resources such as wind and biomass energy. The agreement B.C. just entered into with the pacific coast states will ensure the carbon-free nature of many of our natural resource assets is valued in the increasingly international trade in North American electricity.
Carbon taxes were a very controversial issue when first introduced, and indeed they still are. There have been very few jurisdictions worldwide which have managed to successfully introduce a carbon tax and even fewer still that have been able to maintain one for the long term. Although modest, B.C.'s carbon tax is an exception to the rule. The cooperation agreement recently entered into by B.C., Washington, Oregon, and California is symbolic of how our carbon tax has come of age and is here to stay.
