May 3, 2013 UPDATE: CBC has posted an editor's note to its website which resolves my concerns with respect to its initial reality check on the effect of the carbon tax. Click on "Editor's Note: Reality Check | B.C.'s carbon tax" to read CBC's clarification.
April 26, 2013 UPDATE: The News Director at CBC Vancouver responded to my complaint and defended their use of Alexander Wood of Sustainable Prosperity. I disagree that Mr. Wood can be seen as independent on matters relating to the carbon tax since his organization has been a strong advocate; consequently, my complaint will now proceed to the Office of the CBC Ombudsman.
April 25, 2013
Fact Check on CBC Election RealityFact checking, or reality checks as CBC calls them, can be very helpful during election campaigns as voters try to sort out what is truth and what is not. Unfortunately reality checks can become worse than political propaganda when they are inaccurate because the credibility of a news organization is attached so voters might be more likely to believe what they are told. I have filed a complaint with the CBC Ombudsman over the reports discussed here; under the CBC's rules, those responsible for the misleading reality check have 20 working days to respond. I'm pleased to report that a representative from CBC Vancouver phoned me to say that since an election campaign is on I will receive a reply quickly.
On Wednesday April 24th on CBC Vancouver's "The Early Edition" a reality check was aired on the topic of the carbon tax. (1:30 this April 24 past episode clip) Ottawa economist Alexander Wood with Sustainable Prosperity was quoted as if he were an unbiased expert and the reporter said the carbon "tax itself is an environmental measure that cuts fossil fuel use by 17%". The reality check story was repeated on CBC's evening TV news, this time with a Statistics Canada graphic and the reporter, preceding the segment with Wood, saying "we dug into the statistics". Like the radio version, it concluded saying the "tax itself cuts fossil fuel use by 17%". Regrettably Wood and the CBC story is not accurate.
A debate has raged throughout the world on the best way to reduce greenhouse gas emissions. Some argue for price mechanisms, like BC's carbon tax or the EU's cap and trade system, while others argue for regulation, such as stricter emission requirements for vehicles. Of course many environmentalists say use every possible tool before it is too late; using regulation does not preclude also using a carbon tax. It is important, however, to attempt to quantify whether measures such as BC's carbon tax are having the desired effect.
Sustainable Prosperity, as can be seen from its September 2012 submission to BC's carbon tax review, is a strong advocate for the carbon tax. In June 2012 it produced a research report titled British Columbia's Carbon Tax Shift: The First Four Years which formed the basis of the figures cited by Wood and reinforced by the CBC. It qualified its report:
"It should be noted that, while the data presented below may be useful in showing a correlation between fuel use (or GHG emissions) and the BC carbon tax, they cannot show conclusively that the carbon tax shift is what caused any difference in BC's performance. More detailed study will be required to better determine the specific effects of the carbon tax shift - particularly economic modeling analysis."
It is actually much worse than not showing conclusively because when one digs into the data they do not consistently show better (reduced fossil fuel use) performance for BC. Since the publication of the report, data up to January 2013 has become available. In calendar year 2012, for the fuels examined by the report, consumption in Canada declined by 6.0% while consumption in BC increased by 2.7%. Between 2011 and 2012, Canada's population increased by 1.1% while BC's population increased by only 0.9%, so adjusting for population makes the situation worse for the argument put forward in the report.
The Sustainable Prosperity report looked at per capita consumption of a collection of fossil fuels: butane and butane mixes, naphtha specialties, motor gasoline, stove oil/kerosene, diesel fuel oil, light & heavy fuel oils, petroleum coke, and still gas. Data for consumption of those fuels are available in Statistics Canada's CANSIM table 134-0004. Data can be selected for domestic sales of various fuels by province measured in cubic meters. I don't know what you get when you add a cubic meter of butane to a cubic meter of motor gasoline but that is the way the report analyzed the data, adding the volumes sold of the various fuels and then converting the totals to cubic meters per person before calculating percentage changes from 2008 to 2011 and comparing those percentages between Canada and BC. Motor gasoline represents approximately 52% of the total volume of the mix of fuels for both Canada and BC; diesel represents 34% for Canada and 39% for BC. The different mix in the combination of fuels is just one of the conceptual problems in the report.
BC's carbon tax became effective July 1, 2008 at a price of $10 per tonne. It increased by $5 per year until July 1, 2012 when it reached $30 per tonne. That works out to 6.67 cents per litre for gasoline. With gas at over $1.35 per litre, the carbon tax is about 5% of the price. Most studies of the effect of price changes on fuel consumption show that fuel is price inelastic, meaning that a 1% increase in price produces less than a 1% drop in demand; however, Sustainable Prosperity would have us believe that adding 5% to the price produced a 17% drop in demand. If that were true, it would be earthshaking economic news. Of course, a good rule when doing any calculation is to double check if the results appear completely out of line with what should be expected. Part of the problem with the report might be that they didn't wait until the carbon tax reached $30 per tonne in 2012 before rushing to publish. In 2012 relative to 2011, on a per person basis, consumption of the bundle of fuels decreased by 6.8% for Canada but only by 0.7% for BC. In other words, even the crude data don't support the report, let alone issues that arise due to not having an economic model.
Had the Sustainable Prosperity report been peer reviewed and published in a reputable journal, these errors might have been avoided, but the report is self-published by an advocacy group. As such it is astounding that CBC would blindly take its word and assert to its many listeners in the middle of an election campaign that the carbon tax was accomplishing what amounts to an economic and environmental miracle. That's just not true and the CBC should broadcast an unqualified apology and correction saying its reality check on the carbon tax was based on information provided by an advocacy group that does not stand up to scrutiny. It appears that CBC's "reality checks" need to be fact checked so they aren't misused as political propaganda.