B.C. climate plan opts for incentives over strong-arming

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The B.C. business community signed onto the NDP government’s plan this week, calling it a tremendous economic opportunity. The endorsement reflects a full year of backroom discussions which resulted in a plan that is, for the most part, all carrot and no stick. The plan is also expected to offer a painless transition for consumers.

Greg D’Avignon, president and chief executive of the Business Council of B.C., said his organization approached Premier John Horgan, asking to work together to develop a climate strategy that would not drive industry out of the province.

“If you use too much stick, you might reach your [greenhouse gas] reductions because the capital will have fled. That’s not a threat, it’s a reality,” he said in an interview Thursday, pointing to the announced closure of General Motors’ auto plant in Oshawa, Ont., as an example of how industry can be mobile when it comes to investments. That process was starting in B.C., he said, with investment leaking out because of high taxes that put industry at a competitive disadvantage.

The CleanBC plan, announced on Wednesday, aims to use one of the province’s natural advantages – an abundant source of clean hydroelectric power – to brand B.C.'s mining, energy and forestry products as low-carbon solutions to the greenhouse gas (GHGs) challenges that each of its trading partners are grappling with.

It means replacing fossil fuels with electricity in home heating, in transportation, and in industry, to meet the B.C. targets to reduce greenhouse gas emissions by the year 2030.

To get industry onside, the plan relies on rewarding changes, rather than forcing them. “We think it will be a lot of carrot," Mr. D’Avignon said.

The government says the price tag for the transition, and the details of the tax breaks and rebates will be revealed in its February budget. The incentives to large industry include a reduction in carbon-tax costs for operations that meet world leading emissions benchmarks, as well as a clean industry fund that invests some industrial carbon tax revenue directly into emission reduction projects.

The province is also promising to provide clean electricity to new natural gas production and other large operations by building additional transmission lines, but it has not explained how the new infrastructure will be funded. In all, industry is expected to deliver the largest share of reductions in GHGs, a total of 8.4 million tonnes annually by 2030.

Susan Yurkovich, president of the Council of Forest Industries, said her sector is ready to do its part, but it has to be done in a way that allows industry to remain competitive in international markets.

“Every single industry [in B.C.] is going to have to participate,” she said in an interview.

Environment Minister George Heyman said reaching an agreement with the business community was “easier than perhaps I thought it would be.” He said the government was prepared to offer certainty, and it would rely on incentives rather than punitive tactics.

“Big industry players realize that climate change is a threat,” he said. “I’m very pleased to see the breadth of support for the plan.”

For consumers, the plan also promises a seamless transition, with rebates on zero-emission vehicles and home retrofits. But the rate of participation will depend on the details, experts say.

In an e-mail exchange, economics professor Werner Antweiler of the University of British Columbia said studies have suggested homeowners inclined to retrofits are more affluent and informed than other homeowners, leading to a process of “self selection” for participation.

He added, “Often the biggest obstacle to adopting energy efficient retrofits is that there are high upfront costs that are matched by lower operating costs over a long time, and this type of amortization calculation is difficult to carry out for consumers at the point of purchase.”

Mr. Heyman said B.C. is looking at a loan program that would allow homeowners to borrow at low rates, and repay the costs over time as they save on energy costs, but no decision has been made yet.