B.C. risks ‘carbon leakage’ without business incentives: business council

Tax, regulatory, carbon offset and capture regimes not competitive globally: report

B.C. risks “carbon leakage” to the rest of the world if it does not provide incentives to emissions-intensive industries to stay in or come to the province due to non-competitive carbon regulatory and tax regimes, the Business Council of B.C. (BCBC) says.

BCBC president Greg D’Avignon said such leakage happens when such industries leave B.C. where carbon content in industry is lower and move to more competitive jurisdictions where they release increased emissions to the environment. That, he said, increases greenhouse gas emissions globally.

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“Overall, the carbon footprint of B.C.’s export sector is among the smallest in the world due to B.C.’s clean electricity generation and other investments in operational efficiencies and innovations made by B.C. companies in order to compete,” the report said. “This stands in contrast to our major foreign competitors.”

The findings are part of the report released Aug. 11 with 21 recommendations for government.

The report is an accompaniment to BCBC’s July pandemic recovery recommendations saying B.C. needs an economic plan to spur economic recovery, slash the provincial sales tax, foster innovation and investment and create an environmentally sustainable business climate.

D’Avignon said the recommendations support the Clean BC plan released by Premier John Horgan in December 2018, with work on it having been underway since that plan’s release.

D’Avignon said B.C. produces products containing lower carbon components or are made using lower carbon energy. He said B.C. export energy and commodities are half the climate change-causing GHG intensity of the province’s global competitors.

But, he said, B.C. is the world’s only jurisdiction with a carbon tax but no protection from the government for emissions-intensive trade-exposed producers. What that means is industrial sector profit margins are significantly lower – anywhere from 11 per cent to 87 per cent - when compared to global competitors.

And that, D’Avignon said, is a deterrence to investment in B.C. and leads to jobs either leaving or not coming to B.C. in the first place.

“There is an opportunity for B.C. to become a verified, competitive low-carbon supplier of the energy, commodities and innovations the world needs and will consume in the years ahead,” D’Avignon said. “Acting on this plan means investment that creates high paying jobs for people and new innovations that benefit British Columbians and addresses the global climate challenge.”

Further, said BCBC consultant Kim Henderson, other jurisdictions are aggressively marketing themselves. B.C. needs to create a business strategy marketing low-carbon-content commodities and endorsing protections for emissions intensity exposed businesses.

So, the council recommends 21 actions in the areas of:

  • developing a clear business investment strategy;
  • embracing carbon offsets and market mechanisms as compliance tools;
  • endorsing protection for emissions-intensive trade-exposed production from the full carbon tax consistent with federal policy in order to prevent carbon leakage;
  • refocusing current infrastructure/capital plans to support Canada’s export economy and trade patterns and further the build out of clean infrastructure; and
  • supporting further adoption and diffusion of technology and innovation across industries.

Specifically addressing climate-change policy, BCBC said Victoria needs to include carbon offsets and market mechanisms as compliance tools in their climate framework with investment in nature-based solutions, while Ottawa needs to coordinate a national offset market and work on intellectual property development in technology areas for industry to use to fight climate change.

D’Avignon said such change would help companies wanting to get to net-zero emission by 2050.

Emission offsets have been part of B.C.’s climate action toolkit since 2008, the report said.

“However, offsets and market mechanisms, such as carbon trading, are not included as compliance tools in the climate policy framework for industry,” the report said. “That is resulting in lost opportunities. B.C. industry offset projects could have a material impact on both GHG reductions and the economy. There is significant interest and opportunity from Indigenous leaders in B.C. in offsets and nature-based opportunities that can support economic opportunities.

B.C. Council of Forest Industries president Susan Yurkovich said B.C. forest products and know-how are in global demand.

“We see more opportunities ahead, but to maximize them and the benefits to British Columbians, we need to be able to successfully compete with suppliers around the globe,” she said.

jhainsworth@glaciermedia.ca

@Jhainswo
 

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