Why Exxon Loves the Carbon Tax--and Voters Should Not

This piece was originally posted at Yes! Magazine. 

On Election Day, Washington’s voters will decide whether or not the first statewide carbon tax will be implemented in the U.S.—which would likely pave the way for similar initiatives. But before voters go to the polls, it’s important to understand what a carbon tax will and will not do, and that putting a price on carbon emissions is not going to fix our climate problem or save the planet. In fact, it will help the largest perpetrators of climate change—fossil fuel companies—continue to profit from it.

Washington’s initiative and British Columbia’s carbon tax model

Washington’s Initiative 732 proposes to reduce greenhouse gas (GHG) emissions by placing a tax on each ton of carbon emitted by many state sources. Proponents of the initiative point to a similar tax that was enacted across the border in British Columbia as evidence that the approach works. But did it really? A recent report from Food & Water Watch that analyzed the Canadian province’s latest GHG emissions data show a program that has had little, if any, impact.

British Columbia initiated its $10 CDN per tonne of carbon tax in the middle of 2008 with $5 CDN per tonne increases each year thereafter until it reached its peak—and current rate—of $30 CDN per tonne in 2012. Like Washington’s proposed tax, British Columbia’s tax was designed to be “revenue-neutral,” meaning that all the money raised from it would be put back into taxpayers’ pockets in some form.

While the province’s GHG emissions did fall the first full year of the tax, it is likely that those reductions were a continuation of a downward emissions trend that started in 2004 and culminated in the 2008 recession — not due to the tax. What the data also show is that from 2009 to 2014, GHG emissions from taxed sources in British Columbia rose by 4.3 percent. (In the four most recent years average year-to-year taxed emissions have risen at a greater rate than average year-to-year untaxed emissions.) The latest projections issued by Environment Canada show British Columbia increasing its GHG emissions by 12.5 percent by 2020 and nearly 30 percent by 2030, preventing the province from meeting its reduction targets.

Since carbon taxes result in higher gasoline prices at the pump, tax proponents hang a lot of hope that this will lead to decreased gasoline sales. However, not only did taxed emissions rise under British Columbia’s carbon tax, but gasoline consumption also rose. From 2009-2015 motor fuel sales rose 7.4 percent, exceeding 2008 levels every year except 2012. No one who has lived with wildly fluctuating gas prices these past several years should be surprised by that outcome—people drive because they have to, not because they want to. Increasing gasoline prices only means that struggling families will have to cut back on other expenses to fill up their cars at the pump.

Carbon taxes: Business as usual, not climate action

Carbon taxes have not been demonstrated to reduce GHG emissions or gasoline consumption; working and middle-class families have no alternative but to drive. In reality, for the big fossil fuels companies that pass the cost of the tax onto struggling consumers, it means business as usual with no impacts on production or profits. That’s why ExxonMobil’s preferred approach to climate change is a carbon tax. In its statement on the 2015 United Nations climate talks in Paris, the company said a carbon tax was “the best option” to address climate change, “let[ting] market prices drive the selection of solutions.”

What tax proponents do get right is that we have to act fast to counter climate change before we reach an irreversible tipping point. Here’s where we can look at another Canadian province for guidance on how to really cut GHG emissions.

From 2005-2014, Ontario achieved a 19 percent reduction in GHG emissions largely due to shutting down dirty coal-fired power plants and moving away from fossil fuels—not by taxing emissions and allowing pollution to continue as long as someone—inevitably the consumer—pays a price. 

A Yes vote on I-732 is not going to save the planet. It will not even make inroads on Washington’s own contribution to the problem. Instead of an ineffective carbon tax, Washington, and the nation, should implement true climate-friendly policies, like installing the best emissions reduction technologies available and quickly replacing fossil fuels with renewables with the goal of achieving a 100 percent clean energy system and zero emissions by 2035.