NDP, carbon tax, and more facepalming

On my honour I assure you I am keeping an eye out for those times when the NDP in Alberta will (we hope) make some excellent decisions and handle situations extremely well. I’ve seen a couple of relatively minor “good job” moments, but they are consistently drowned in a sea of “you’ve got to be kidding.”

The latest facepalm moment is just an extension of the ongoing carbon tax fiasco.

That the carbon tax is a bad idea, especially at this particular point in Alberta’s economic collapse, is relatively self-evident except to those who believe the government can magically fix everything if we just hand them enough of our money. But, they went ahead with it anyway on January 1, 2017. Then, to prove the naysayers wrong, they had this to say on January 2, 2017:

Alberta Environment Minister Shannon Phillips says the province is “still standing” a day after its carbon tax took effect.

Wow. Yes, you read that right.

A full day after introducing a new province-wide tax, the NDP confidently stood before our province and declared that we are “still standing.” Imagine if we extended such reactionary, wide sweeping declarations to other areas of life.

“I’ve been on this workout program for two days and I just haven’t lost any weight; it doesn’t work.”

“I don’t know what all the fuss is about; I’ve been smoking for two days and I don’t have cancer.”

“This unemployment thing is great; I’ve been out of work for two days and I still have lots of cash in the bank!”

“I’ve been eating nothing but leftover Christmas goodies for two days and I haven’t seen any change in my physique!”

“Trump has been president-elect for two days and the nation is still standing.”

“I’ve been driving my fossil-fuel guzzling car around for two days and the temperature of the planet hasn’t gone up at all.”

In fact, let’s use exactly their same logic on the whole climate change thing toward which this tax is allegedly directed.

“Alberta’s carbon tax has been in effect for two days and the temperature of the planet hasn’t changed at all; it isn’t working!”

Are you buying that logic? I didn’t think so.

There are many times when we can chalk up the absurdities that come from the NDP to their inexperience, and perhaps a little grace ought to be extended to them for that reason. We all make mistakes, and a government as junior as this one can hardly be expected to do everything smoothly. But when a minister of government stands before the province and makes these kinds of declarations one is inclined to wonder just how stupid she must think Albertans are. Calling the tax a “levy” was an obvious attempt to soften the blow of Alberta’s first virtual sales tax, and many eyeballs continue to roll at that, but this attempt to declare the carbon tax a success because Alberta is “still standing” when the tax hasn’t even been in effect for a week is just appallingly bad and insulting to our collective intelligence.

Who’s making Alberta the embarrassing cousin now? Look who we’ve got in charge; a group of folks who believe the full economic impact of a significant tax regime change can be measured in hours and days, not months and years.

That’s not all…

Let’s get back to the carbon tax itself and remind ourselves of just how pointless it really is. Back to basics; what’s the point of taxing carbon? We’ve been told that the point is to inspire a reduction in use of carbon-based fuels. After all, if they cost more then we’ll be inspired to use them less.

On the face of it, that sounds reasonable. But only on the face of it; the devil is in the details. The carbon tax will be accompanied by a rebate that sixty percent of Albertans will enjoy. The intent of the rebate is to soften the economic blow associated with paying more at the pump.

And paying more to heat your house.

And paying more at the grocery store.

And at the leisure centre.

And…

And…

And…

In short, because the NDP just made life more expensive for everybody (something the minimum wage hike will also contribute to) they felt inclined to reduce the impact of the fact that fossil fuels are more expensive.

But, wait. Wasn’t the entire point of taxing carbon specifically to make it more expensive so that people would be less likely to buy it? If we get rebates to offset the pain, then where’s the motivation to stop buying fuel?

The entire point of a “sin tax” is to encourage people to stop engaging in potentially socially harmful activities. We tax cigarettes because we hope the increased cost will encourage people to quit smoking. We tax alcohol so that people might be motivated to reduce their alcohol consumption.

So imagine if cigarette and alcohol buyers were taxed, but were then given rebates?

“Hey, honey, the price of cigarettes just went up; can you believe it?”

“Don’t worry, dear, the rebate check just arrived in the mail today.”

What’s the point of that? According to the government’s website, the purpose is to, ” protect those who spend a higher percentage of their income on energy costs and have fewer financial resources” because, “[t]he rebate is solely tied to income and not energy use.”

Roughly sixty percent of Albertans can expect to receive the full rebate because it is intended for lower and middle income families. That these demographics are being, in some sense, “exempted” from the full brunt of the carbon tax means they are unlikely to significantly alter their behaviour with respect to fossil fuel consumption.

So I guess then NDP seem to think it’s only rich people and businesses that contribute the lion’s share of fossil-fuel consumption. If we can just get them to stop using so much then it’s fine if the other sixty percent of Albertans keep doing exactly what they are already doing.

Actual fuel consumption data

Which raises an interesting question; who is burning all these fossil fuels anyway? Thanks to Statistics Canada, we can get some hints. In 2003 a full 54% of energy consumption was natural gas. Of the natural gas, only 4% was converted to electricity, so 50% of energy consumption was natural gas that was not used for electricity. What was it used for?

I’m going to go out on the limb here and assume that a pretty significant portion of the natural gas that gets consumed in Alberta – where temperatures drop down to the -30C range on a somewhat regular basis every winter, and where natural gas is the primary heating fuel in virtually every home, business, mall, recreation center, office tower and even a few garages – is just to keep us warm in the winter. Heaven forbid that we actually keep warm! Clearly we need to exercise some “climate leadership” by dropping the temperatures and just hoping we don’t suffer adverse health effects from the cold.

Yes, of course, there is still room to improve the thermal efficiency of our buildings, and I am a firm supporter of any such initiatives. But these technologies will reach a point of diminishing returns. As an engineer with some knowledge of the principles of thermodynamics I can assure you that we can only take such technologies so far. We can improve thermal efficiency, but we cannot eliminate heat transfer and waste. It’s the laws of physics; deal with it. We live in a cold climate (unless global warming finally kicks in!) and we can expect to keep burning a whole bunch of natural gas just to keep ourselves alive.

After natural gas comes “refined petroleum products” at 27% of energy consumed. Of that, only 7% is motor fuel and another 7% is diesel fuel, for a total of 14%. 13% is “other products.” But this is another of those cases of diminishing returns because – call me crazy here – people need to transport themselves and their goods. People need to get to work, and even public transit uses fuel. Alberta companies who manufacture goods need to deliver them to customers, and those who provide services often need to transport themselves to their customer’s location in order to provide such services. We just had a stove installed by a service provider; he physically showed up at our house because it’s not the kind of thing one can “skype in” for.

As with thermal efficiency of buildings, improvements can be made, but again there is a point of diminishing returns. There are only so many ways that we can reasonably reduce our transportation needs without becoming a society of hermits who never leave the house and live exclusively off the tiny garden in the back yard.

There is a certain irony, though, in the fact that I write this particular blog post while I am out of work. Like the roughly 10% of Calgarians who are suffering from the effects of the economic downturn, my transportation needs have seriously declined. Perhaps the utterly misguided economic policies of the NDP are part of their broader “climate leadership plan.” After all, the more Albertans they can keep out of work through economic policies that seem, to the naked eye, specifically designed to make Alberta a horrible place to do business, the fewer people there are using their fossil-fuel-powered motor vehicles, buying goods and services from their fellow Albertans, and so on. This economic downturn may be the best thing for the environment, and it would be in the NDP’s best interest to ensure that the economic downturn runs as deep and as long as is humanly possible.

Albertans have this horrible habit is being entrepreneurial and energetic, so it will take sustained, coordinated and extremely pro-active effort on the part of the NDP government to keep Alberta down for as long as it possibly can. The last thing the environment needs is an economic recovery!

By the way, coal came in third place at 19% of energy consumed, and almost all of it went to electricity. But, hey, we’ll all have wind turbines and solar panels soon so hopefully it’s really windy and sunny in Alberta. Every day. All day.

Will it work?

But if it manages to reduce fossil fuel consumption, isn’t it worth it? Well, if one assumes that fossil fuels are actually having a net destructive impact on the planet (which, I would contest, is far from scientifically established) then of course it is important to reduce their consumption. But here’s the more important question; do carbon taxes actually reduce fossil-fuel consumption? Well, if British Columbia’s experience is any indication, the answer is “not really.” Statistics Canada reports annual fuel sales in each province and the sales in British Columbia in 2015 have never been higher, as the following chart shows.

gross_sales_fuel_british_columbia

[There is no easy way to link directly to the data, so you have to do a little of the legwork yourself. Go to StatsCan CANSIM website and do a search for “405-0002.” Then you can “Add/Remove Data” on the tab at the top. I selected “British Columbia” for all the years that are available, and only “gross sales of gasoline” then I picked all the years that they have on record.]

Yes, when the carbon tax was introduced in 2008 there was a slight drop in the amount of fuel that was purchased, but it immediately crept back up again. And then down again around 2013.

And then way up. The rise from 2014-2015 was quite remarkable. But even if we ignore that, the rise and fall of fuel consumption in the province didn’t really go up or down a whole lot more after 2008 than it did before 2008. In fact, since about 2000 (almost a decade before the carbon tax was implemented) the fuel consumption of British Columbia hadn’t seriously changed at all in any direction.

It you poke around on the internet for a while it’s not hard to find people who have made the case that BC’s carbon tax has been a resounding success by dramatically decreasing fuel consumption. How they managed to angle the data has been interesting. Some have only looked at fuel that gets taxed while ignoring all the fuel that does not get taxed. Others have tried to spin it as “fuel per capita” with is admittedly informative, but does the environment care if the fuel burn is for one million people or for two million people? Not really. At the end of the day the only number that really matters is now much energy, of any kind, for any purpose, and for any number of people, was actually used.

CANSIM has another informative table (use the same process as above to look up Table 128-0017) that documents the total energy use, by energy source. Let’s take a look at a couple of the biggest ones and compare 2007 data (pre-carbon tax) to 2014 data (the latest year on record) for “energy use, final demand.”

Natural gas (gigalitres): 2007 – 5904.2, 2014 – 5976.6

Gas plant natural gas liquids: 2007 – 467.2, 2014 – 1274.9

Refined petroleum products: 2007 – 10,867.2, 2014 – 10,635.9

As you can see, in some cases it went up, and in other cases it went down, but most changes were marginal. As the previous chart shows, there was a substantial spike in 2015, and the data in this table only goes to 2014, so in all likelihood if we had the most recent data it would show an increase in most areas.

But that is speculation, so take it with a grain of salt.

If we are to believe that humanity’s total fossil-fuel consumption needs to go significantly down – in absolute terms, not per capita – then we can confidently say that BC’s carbon tax has not accomplished that goal.


In short, Alberta’s carbon tax:

  • Will not significantly demotivate the average Albertan from using fossil fuels because of the rebates.
  • Will not significantly reduce the total fossil fuel consumption (if BC’s history is any indication).
  • Will almost certainly produce economic consequences of an extremely negative sort that will disproportionately impact individuals – especially those with the least financial resources – and small businesses, if the Aussie experiment in carbon tax is any indication.

It will hurt our economy and do absolutely nothing for the environment.

Why are we doing this?

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