Paying for Pollution

A realistic price on dirty energy is key to a healthy clean-tech sector in B.C.

Payment on pollution helps level the playing field for clean-tech companies in B.C.

A realistic price on dirty energy is key to a healthy clean-tech sector in B.C.

As governments scramble to promote clean technologies, it is worth evaluating the model we use to build our clean-tech industry. Provincial support revolves around grants and incentives funded by taxpayers. However, a strategy for B.C. to build a solid clean-tech community must go further. The only fair way for this province to successfully develop a viable clean-tech sector is to hold polluters accountable. Until individuals and especially industry pay the true price of pollution, there is no commercial or social incentive to invest in clean technologies.

Demanding payment for pollution accomplishes important objectives. For instance, punishing polluters and incentivizing “greener” choices through environmental taxes and fees is an effective way of modifying consumer behaviour. Moreover, duties are an appropriate instrument to drive industry to decrease its emissions through operational improvements and technology upgrades. These steps can level the playing field, allowing clean tech to compete with traditional industries.

According to a report by Hydro-Québec, Vancouver has the third-lowest electricity prices among major North American cities. However, current pricing does not put any cost on the environmental damage resulting from, for example, BC Hydro’s imports of dirty energy from Alberta’s coal-burning facilities. This absence of penalties means local renewable-energy companies have difficulty attracting the attention of BC Hydro, which controls most of the province’s electricity distribution and generation. Failing to address this problem essentially implies that the government subsidizes energy usage.

Low domestic electricity prices also mean there are few incentives for industry and individuals to seek alternative energy and efficient technologies developed, manufactured or commercialized by B.C. entrepreneurs. Germany, in comparison, has managed to develop the world’s strongest clean-tech sector because that country’s high electricity prices, coupled with its need for energy independence and phasing out of nuclear power, gave leaders the political mandate to introduce a costly feed-in tariff program, where renewable-energy producers are guaranteed grid access, long-term contracts and above-market prices for the energy produced. 

However, feed-in tariff programs are not the answer here; subsidizing clean tech through such a program would no doubt be as unpopular in B.C. as it is proving to be in Ontario. Instead, one solution lies in increasing B.C.’s pioneering carbon tax to a level where it acts as an emissions deterrent and where money from it can be channelled directly into clean tech. The fee on pollution, introduced in July 2008 at a rate of 2.4 cents per litre of gasoline, will reach 7.2 cents by 2012. According to research from the University of California in Davis, the optimal gas tax in California would be between 33 cents and 40 cents a litre. However, raising the rate rapidly in B.C. to reach that level would have a serious impact on local industries. A more politically feasible target is 20 cents a litre by the end of the next five-year schedule, or 2017, which is moderate enough to allow businesses to plan accordingly. This increment would essentially double the targets of the current plan and send a strong signal that the government is fully committed to combating climate change and fostering a stronger clean-tech domestic market. 

While the ideal approach and its rate of implementation are up for debate, the goal is clear. Until industry and individuals in Canada pay the true price of pollution, the means and will to embrace clean tech will falter in this country. And with a predicted US$7-trillion global investment in clean tech up for grabs by 2030, both the environment and our wallets stand to lose if we do not change our ways.