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How might a carbon tax change Alberta? Just ask British Columbia

British Columbia implemented carbon pricing seven years ago. Here are some ways it changed industries and cities

Alberta Premier Rachel Notley unveiling the province’s carbon tax plan on November 22, 2015

Alberta Premier Rachel Notley unveiling the province’s carbon tax plan on November 22, 2015. (Amber Bracken/CP)

It’s a truism that people (and their behavioural proxy we call “markets”) tend to overestimate change in the short term and underestimate it in the long term. When Premier Rachel Notley announced Alberta’s new climate change strategy over the weekend, analysts and pundits rushed to gauge the impact on the oilsands and on the electrical generation business, still dependent as it is on coal.

But what caused the big oilsands and power companies to support the plan is that it primarily takes the form of a broad-based carbon tax. That is, instead of specifically penalizing one industry, it requires everyone to pay their share, industries and end users, down to the Edmonton parents pondering whether to enroll their five-year-old in the neighbourhood school or the one with a performing arts specialty across town. It also means future governments won’t be tempted to jack up the tax inordinately, because that would mean punishing the very people who elected them.

And it follows that Notley’s climate plan and the popular zeitgeist it represents will have significant impacts not just on the hydrocarbon sector but where people choose to live and work and how they get around. It’ll affect the form real estate development takes and where employers choose to locate.

We have some experience with this in British Columbia, where a broad-based carbon tax has been in place for seven years. Studies indicate carbon dioxide emissions from transportation in the province have declined 16% in that time, and while it’s impossible to draw a direct causal relationship between the tax and the emissions decline, it’s fair to say it was a factor contributing to indisputable behavioural changes—you can’t emit 16% less CO2 by doing the same things you did before.

Some trends observed in B.C. since the carbon tax came in:

  • Prices for residential real estate have increased fastest in large cities with good transit infrastructure, namely Vancouver and its closest suburbs.
  • Residential and office development has exploded around transit nodes. Office rents are noticeably higher within walking distance of rapid transit stations.
  • Job creation has been strongest in these urban areas.
  • Population and economic activity has been flat to declining in rural areas and small towns, with very few exceptions.
  • Large employers such as Telus Corp. have adopted work-at-home options across their workforces.
  • A City of Vancouver survey of 2,500 residents this year indicated that, for the first time, fewer than 50% of trips within the city were made by car. People more commonly get around by walking, cycling or taking transit.

While some of these trends were already happening before the imposition of the carbon tax and are not unique to B.C., the policy is widely supported and appears to be working in concert with other societal changes.

If anything the potential for disruption is greater in Alberta, where people think nothing of driving three hours each way for a weekend jaunt in the mountains and where Calgary and Edmonton are putting the finishing touches on ring roads that link far-flung suburbs and quicken the commutes from semi-rural acreages. Not just the oil and gas industry, but every kind of business in Alberta should start thinking about who and what the winners and losers will be in a carbon-constrained future.