CARBON TAX: MEANS OF ACHIEVINGCANADIAN TARGET ON GREENHOUSE

GAS EMISSIONS? *

Joan Ofulue

April 20, 2016

Abstract

In 2008 the government of British Columbia introduced a Carbon

tax policy to help reduce greenhouse gas emission. This was seen as

an effort within Canada to show that provinces are willing to join the

fight against climate change. The progressive carbon tax introduced by

BC is evaluated using the difference-in-difference approach. My results

suggest a significant decrease in total fuel consumption(gasoline and

diesel) by about 10% over the period of 2008 - 2013. This is similar to

the literature that has used different techniques.

Keywords: Carbon Tax, British Columbia, Greenhouse Gas,C02.

*My appreciation goes to Abel Brodeur, the course professor for this course who providedme with all the guidance, suggestions and help. Also Marcel Voia for his advice and input

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1 Introduction

Until recently, Canada has been defiant about the issues regarding climate

change and greenhouse gas emissions, this was evident in her decision to drop

out of the Kyoto protocol in 2012 claiming it would save the government

$14billion dollars in penalty. With the target of keeping the world's tempera-

ture at 2 °C, Canada's effort to salvage its international reputation has recently

been applauded with its Carbon tax policy first introduced in 2008 in British

Columbia.

Climate modellers suggest that the world emission should not exceed 2900Gt

to maintain the 2 °C threshold and by 2011 an estimated 1890Gt has been used

already. This issue has been of concern to the world due to the disastrous im-

pact of climate change. No wonder the need for the 2015 World climate change

conference in Paris that led to countries successfully reaching a climate change

agreement. As there is an increasing incidence of global warming effects (such

as the mountain pine beetle infestation in BC) it is very important that every

country gets involved to prevent these negative effects. The example provided

by BC policy should be applauded even if BC represents a fraction of the

Canadian emissions, which are measured as 2% of the world's emission. In

addition,air pollution caused mainly by burning fossil fuels, cost thousands of

lives and more than $8 billion a year to Canada 's economy. 1. 2

There is a lot of controversy when it comes to issues of tax implementation,

in particular there is the perception of inducing negative economic impacts,

1http://www.theglobeandmail.com/opinion/the-insidious-truth-about-bcs-carbon-tax-it-works/

article19512237/2A carbon tax is a fee placed on greenhouse gas (GHG) pollution mainly from burning

fossil fuels. This can be done by placing a surcharge on carbon-based fuels and other sourcesof pollution such as industrial processes. It has been argued that a stronger price on emissionis an incentive for Industries to invest in cleaner energy source and also trigger innovationof green technologies.

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especially on unemployment. However, there is no evidence that supports this

idea. The current price of $30 per tonne, which works out to about 7 cents per

litre of gas has created revenue that have been recycled into the economy in

form of tax returns which has further reduced the tax rate for low to middle

income earners. It is not surprising that this policy has gain widespread global

praise because it not only achieves reduced emission but also has other positive

economic impact.

While previous research such as Rivers and Schaufele [2014] and Bernard et al.

[2014] have conducted comprehensive research comparing the elasticities of the

Carbon tax with respect to other fuel prices, they also discover that fuel con-

sumed reduced sigificantly. I contribute to the literature by using a difference-

in-difference approach with controls. This identification approach has not been

used in the previous literature. My main results show that over the period

2008- 2013 the province of BC reduced its total fuel consumed by about 10%.

The estimate is slightly smaller than results from the literature that suggest

that as a result of Carbon tax, fuel consumption has reduced by about 15- 19%.

Most of this research use basic econometrics approaches where many do not

even control for the basic price of the fuels. Several researchers lean towards

the claim that the Carbon tax has led to the demand for a more fuel efficient

motor vehicles that substitute the gasoline with diesel. In this research paper I

found the opposite, as it is not clear what exactly happens in BC with regards

to diesel consumption after 2008.

My estimation uses Quebec and Alberta as control provinces, choice that is

justified in details in the text. As a form of robustness check I use the Ashen-

felter Dip test and discovered no decline in fuel consumed before 2008. This

further supports the model choices made in the paper.

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The paper proceeds as follows. Section 2 covers the conceptual frame-

work which is divided into 2 subsection. I explain the design of the Carbon

tax and then a literature review. Section 3 explains the various data source,

collection, manipulations and basic descriptive statistics. Section 4 explains

our difference-in-difference identification strategy and Section 5 empirical re-

sults.The empirical result is described under main findings and a robustness

check using the Ashenfelter Dip. Section 6 concludes and a brief research

shortcoming identified under this section.

2 Conceptual Framework

2.0.1 Design and Myth of the Carbon Tax

A lot of policy makers have renounced the Canadian carbon tax as a solu-

tion to the issues of climate change, irrespective of the attractive benefits in

tackling greenhouse gas emission. The BC carbon tax introduced in 2008 suc-

ceeded because first it was adopted by a party already in power and second

the onset of a recession before the next elections shifted voters'attention to the

economy, which advantaged the BC's Liberals but disadvantaged their federal

counterparts Harrison [2012]. 3 While there is a negative perception about the

Carbon tax, the tax collected at the point of retail consumption (for example,

at the pump for gasoline and diesel) has certain distinctive characteristics that

justifies its potency. First, the Carbon tax is a function of congestion and

3The Kyoto Protocol covers six greenhouse gases: carbon dioxide, methane, nitrous oxide,hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride. Of these six gases, three areof primary concern because they are closely associated to human activities. Carbon dioxideis the main contributor to climate change, especially through the burning of fossil fuels.Methane is produced naturally when vegetation is burned, digested or rotted without thepresence of oxygen. Large amounts of methane are released by cattle farming, waste dumps,rice farming and the production of oil and gas. Nitrous oxide, released by chemical fertilizersand burning fossil fuels, has a global warming potential 310 times that of carbon dioxide.

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carbon density in fuels. This means that the tax is higher in locations that are

highly congested and also higher for fuels that produce more carbon. Another

characteristics of the Carbon tax is its price progression.The price of C$10 per

tonne of Carbondioxide equivalent emissions (2.4 cents per litre on gasoline) in

2008 has gradually increased yearly by $5, reaching a current price of $30 per

tonne (7.2 cents per litre at the pumps). Thirdly, the tax covers all emission

from tax combustion and also highly integrated with other complementary

policies/measures aimed at reducing emissions. As a last point, the proposed

revenue neutrality of the Carbon tax induce a sense of relieve for individuals

skeptical about this policy. The revenue neutrality of the Carbon tax. Under

this policy all the revenue obtained from the carbon tax is reimbursed to every

individual as income and to companies as corporate tax adjustments. Low

income individuals and families are protected under this policy. Information

about these points can be found in Table 1

2.1 Literature Review

While some countries have embraced the reality of climate change many still

contend with the appropriate policy to curb their greenhouse emission. British

Columbia has taken a lead in this effort by implementing a carbon tax policy

in 2008.

Metcalf [2015], provides a conceptual framework for assessing the effec-

tiveness of a green fiscal reform. He describes various greenhouse reforms

throughout the world. The carbon tax of British Columbia was one of them.

He runs a simple comparison of per capita growth in GDP in British Columbia

to the rest of Canada. Using the difference-in-difference, he shows that real

per capita GDP grew faster in BC than the rest of Canada at an annual rate

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of 1.4 percentage points between 2001 and 2007 while their growth rates were

comparable between 2008 through 2013. The casual comparison suggest that

the carbon tax has lowered BC's economic growth relative to the rest of the

country. He suggested a more comprehensive analysis that controlled for a

variety of factors that affect provincial economies.

In a recent paper, Hassett et al. [2009], looks at the incidence of a US

Carbon Tax. The paper measures the direct and indirect incidence of a Car-

bon tax using current income and two measures of lifetime income to rank

households. They use Input-Output matrix to discover little systematic varia-

tion in carbon tax burden across regions of the country. Their results suggest

that carbon taxes are more regressive when annual income is used as a mea-

sure of economic welfare rather than when lifetime income measures are used.

They further discovered that the direct component of tax in any given year is

significantly more regressive than the indirect component.

Stewart Elgie [2013] compares change in fuel consumption, greenhouse gas

emissions and gross domestic (GDP) between British Columbia and the rest of

Canada. They analysed data from 2000 till 2012, using difference-in-difference

with no controls and identifying 2008 as the year of policy implementation.

They find that in four years since the tax was introduced, the per capita

consumption of fuels subject to the tax has declined by 19 percent compared

to the rest of Canada. These papers had some limitations with regards to

simplicity and subsequent research which is described below fills these gaps.

Rivers and Schaufele [2014] demonstrate the first rigorous evaluation of

an actual Carbon tax within a North American context. They conclude that

the Carbon tax imposed caused a decline in short-run gasoline demand that is

significantly greater than would be expected from an equivalent increase in the

market price of gasoline. This lead to the conclusion of the Carbon tax saliency.

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They used additional variables such as after tax income, share of small and

compact tax sales and income tax rates revenues to act as control variables.

Their paper strictly follows Li, Linn Muehlegger (2012) approach,where they

specify a simple linear equation and discovered a 11-17% reduction in per

capita gasoline sale. By using a more intuitive approach in analysing this issue,

they identified geographical fixed effects and also interacted the provincial

dummies with prices and taxes respectively. They discovered that the demand

for gasoline in BC is more elastic than for the country as a whole and this

influenced his ability to make inferences with respect to the saliency of prices

and taxes.

Bernard et al. [2014] use a timeseries analysis to look into the impact

of Price and Carbon Tax Effects on Gasoline and Diesel Demand for road

transportation. Using Monthly datasets they study consumer responses to

carbon tax, standard excise tax and price net of these taxes. They discovered

that for the demand for gasoline and Diesel there is no significant difference

between consumers responses to C02 tax versus a standard excise tax. However

there is a different effect associated with taxes relative to the net-of-tax price

of gasoline. Bernard et al. [2014] and Rivers and Schaufele [2014] share the

same research objective in the case of Gasoline but Bernard et al. [2014] use a

richer dataset and source. They use BC transportation fuel consumption data

that includes diesel consumption.

Having these research papers in mind, the key objective of my research would

be to use a different approach to estimate the impact of carbon tax on gasoline

and diesel consumption using the difference-in-difference method of program

evaluation. Rather than focusing only on Bc, I would analyze the difference

in emissions with respect to other similar provinces in Canada.

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3 Data and descriptive statistics

To answer the research question using an empirical analysis, data was collected

from several sources described below.

3.1 Statistics Canada

Most of our data is from Statistics Canada. The data on greenhouse gas emis-

sions for provinces over time is not available. The data source provides the

aggregate emission for Canada overtime (as presented in figure1). I shall be

approximating this with data on Gasoline and other petroleum fuels sold annu-

ally, Cansim Table-405-002. Environment and climate change Canada claims

about 80% of greenhouse gas emissions come from fuel combustion, and so

for this reason data on gasoline and diesel consumption would be applicable.

This annual dataset is generated by aggregating per capita litres consumed

over the year and taking a simple per litre averages for prices and taxes. As

monthly data is preferred for this analysis but is not available, I use annual

data. Table 2 presents summary statistics for annual consumption of gaso-

line and diesel. Since our data on Gasoline and Diesel Consumption is not

expressed in per capita values, I control for population growth using Table

051-0005 (which presents estimates of percentage changes over time for the

population of Canadian Provinces). Prior to July 1,1971, the estimates are

unadjusted intercensal for the census net undercoverage and are final postcen-

sal from October 1, 2011 to April 1, 2015. The average after tax-income, by

economic family type is collected from table 202-0603. This data would act

as a very important control because of the various provincial tax adjustment

made over the years. Also as mentioned earlier, revenue from the Carbon

tax is recycled into the economy in form of income tax adjustment and so

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it would be important to see how BC tax readjustment further impacts the

response variable. Table 282-0087 of Labour Force survey estimate (LFS) pro-

vides provincial data on the level of unemployment . This additional data is

useful for robustness checks, as control in the regression.

3.2 The Kent group

The Kent Group provides data on taxation and fuel prices for all provinces

across time (1993-2013).The order in which the taxes are applied is as follows

1. Consumption and excise taxes(provincial and federal) are added to the ex-

tax price.

2. The GST/HST is calculated and added onto the sum from 1.

3. (In Quebec only) the QST is calculated and added onto the result of 2.

The department of finance provides Federal tax information and each respec-

tive provincial finance department provides provincial tax levels.

All Prices are inflation adjusted using CPI data with 2008 as base year. The

retail average price from each province's largest city is used to proxy for provin-

cial prices. The annual price is gotten by aggregating the monthly prices and

simply averaging the value. From table 2, the descriptive statistics tables are

presenting the data before 2008 and after 2008. The table prior to 2008 reveals

a minimum sale of 4,507,834 and 1,647,352 for gasoline and diesel respectively.

The maximum sale for gasoline and diesel is 5,532,539 and 1,711,683 respec-

tively, with values expressed in litres. This statistics reveals that gasoline is

consumed three times as much as diesel. Looking at the table after 2008 the

maximum quantity of gasoline consumed by 2013 is less with gasoline and

diesel price reaching 4,464,507 and 1,888,162 respectively. Although the quan-

tity consumed by BC decreases, which can be shown in figure 2 3, the overall

change in fuel consumption in other provinces is greater especially in Alberta

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(Canada largest emitting province). The fuel prices before 2008 show that

gasoline and diesel have a min of 81 cents per litre and max of 95.7 cents

respectively. After 2008 the min value increases to 103.4 while the max 127.08

for gasoline and 128.2 for diesel. The other provinces are explicitly defined in

table 4.

We compare the gasoline and diesel consumption for BC, Quebec and Alberta

(Largest greenhouse gas emitting province) in table 4. Our descriptive statis-

tics reveal that BC has the highest Gasoline prices 81.1 with respect to the rest

of Canada. BC seems to be doing well in terms of its average unemployment

and population growth of 7.2% and 1.28% respectively. The figures 2 and 3

reveal the trend of sales for both gasoline and diesel in BC,Quebec, Alberta

and the rest of Canada. The orange vertical line shows the point 2008 on the

graph. Beyond this point the consumption of gasoline and diesel falls in BC

in comparison to Alberta and the rest of Canada where we see a continuous

rise. The plot shows that in 2010 the sale of diesel rises but later falls, which

could be attributed to the governments policy of changing from hydrogen used

whistler transit buses to diesel buses starting in 2009.

To motivate our choice of using the other two provinces (Alberta and Que-

bec) in the analysis, I estimate a regression showing if there is a statistically

significant similarity in trends before 2008 and if there is a change after 2008.

Our result reveal that before 2008 we do not reject the null hypothesis of sim-

ilar trends (p-value (0.243)). Also our p-value of 0.000 after 2008 provide a

preliminary insight into the change in consumption.

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4 Identification strategy

For the estimation, I use a difference-in-difference approach, which is captured

by the following model :

Ypt = α0 + α1BCp + α2Y eart + α3BC ∗ Y earpt + α4Xpt + εpt (1)

Where Ypt is the natural log of gasoline consumed. α0 represents an inter-

cept, BC is a dummy variable representing 1 if BC, 0 for other provinces. Yeart

is a dummy variable representing 1 after 2008 and 0 otherwise. BC*Yearpt is

an interaction term that produces our coefficient of interest α3. It represents

BC after 2008. Xpt represents other control variables such as the trend,the

unemployment rate and the population growth rate. The time period is 1990-

2013.

The same equation is used to estimate Diesel consumption. The purpose of

this classification is to compare the effect on emissions of BC carbon tax policy

versus the effect on emissions of other provinces policies (Quebec and Ontario

run the cap and trade system while Alberta runs a system focused on reducing

GHG intensity of their product). However, given that Quebec and Ontario

started their cap and trade system in 2013, we cannot measure the effect of

BC policy versus other provinces policies, but rather the effect of BC policy

versus the no policy intervention in other provinces.

Standard errors cannot be clustered at the province and year (before 2008 and

after 2008) level to account for time serial correlation within error terms in

the general estimation due to sample size. A series of robustness check were

performed, which lead to a more precise interpretation of our results. In partic-

ular, the use of control variables helped with the identification. This variable

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(unemployment, population growth) in particular is exogenous for our model

by the mere argument that the market for gasoline and diesel is very competi-

tive and also taxes are determined by other factors not included in this model.

Another robustness check was to test if before the policy implementation we

do not have unjustified jumps in the consumption of gasoline and diesel. This

was done using the Ashenfelter Dip test (starting with year 2005). The test

did not show any unusual effect on consumption prior 2008. With these addi-

tional analyses, the final result of our analysis would help us compare by how

much gasoline and diesel consumption have reduced in BC after the 2008.

5 Empirical Result

5.1 Overview of Main Findings

Three sets of results are presented in table 5, 6 and 7. Table 5 shows estimates

for only gasoline consumption while table 6 diesel consumption and table 7

shows a combined impact on total fuel (gasoline and diesel) consumed. Table

5 reports the results in two different columns. The first column shows result

for all provinces and the second column which is our column of interest shows

results for BC, Quebec and Alberta. The estimated model explains 93% of

the variation in the data (R-squared of 0.93), with BCPost2008 being our co-

efficient of interest. We see that if our province is BC after 2008, gasoline

consumption decreases by about 14% which is significant at the 1% level of

siginificance.

My regression results when the control group is Quebec and Alberta accounts

for trend, log of gasoline prices, unemployment and population growth. The

effect on the control variables is clearly not what I would expect although sta-

tistically siginificant. Alot of controversy can arise in explaining this result.

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One of the many issues is that global oil prices fell drastically after 2008, an-

other could be the revenue neutrality of the carbon tax. Some articles suggest

that the design of giving carbon tax back to indiviuduals or corporations could

led to an incentive not to reduce fuel consumption.

Column 1 of Table 5 shows the results for all provinces included in the regres-

sion. The difference in the results could be attributed to the heterogeneity of

fuel consumption in the other analyzed provinces.

In Table 6 we show the results for diesel consumption, which are obtained

using the same model specification. In this case the model explains 91% of the

variation in the consumption of diesel data (R-squared =0.91). The result for

our coefficient of interest doesn't reveal any decrease in diesel consumption. It

is not surprising as Figure 3 shows a lot of variation between 2008 and 2013.

This variation can be explained by the fact that the government of BC was

involved in various policies and project to test run transit energy sources.

To summarize: with Model 1 we reject the null hypothesis that there is no sig-

nificant impact of the carbon tax policy introduced in BC, while with model

2 we do not reject the null hypothesis.

Model 3 would give more insight and provide a comprehensive result. To fur-

ther investigate the effects, I also consider Model 3 (of total fuel consumption).

This model, which is elaborated to capture the total fuel consumption explains

95% of the variation in the fuel consumption data (R-squared of 0.95). In this

model, we see a 10% decline (statistically significant) in total fuel consumption.

Gasprice represents the log of gasoline prices. The coefficient is significant but

has a positive sign to it. The other two controls don't provide expected signs.

Estimating all three models without the controls also show a decline in total

fuel consumed that is statistically significant.

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5.2 Robustness Check- Ashenfelter Dip

The Ashenfelter Dip test was used as a form of robustness check. Results are

presented in table 8. The policy year was assumed to be implemented in 2005.

The estimate show a positive sign that it is not statistically significant and so

we do not reject the null hypothesis that total consumption did not decrease.

This makes it clear that the treatment and control group are systematically

similiar in periods prior to the introduction of our carbon tax policy. One

would be tempted to control for after tax income but carefully thinking of

this variable reveal that would be controlling for the same impacts since BC

currently has one of the lowest Income tax due to the Carbon tax policy. Our

results seem to be reliable as several techniques have further supported the

similiarity of the trends for our choice of provinces.

6 Conclusion

The Carbon tax introduced in British Columbia had a significant impact in the

reduction of gasoline consumption. While the consumption of diesel doesn't

provide clear results, a combined model (that includes both diesel and gaso-

line) shows a significant decline of about 10% in total fuel consumed. The

province has had an overall decline in gasoline consumption of 14% over the

period 2008-2013. The elasticity of the carbon tax and also the revenue design

is of great importance for implementing the policy. Studies like Rivers and

Schaufele [2014] provide an in-depth analysis of this elasticity with respect to

a standard price increase. They explain this characteristics as a resentment of

free-ridership effect. This concern is further supported by the decision of the

government of BC to increase the Carbon tax. The carbon tax has generated

more revenue cuts to the governments than the amount collected. Also,the

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amount collected is further reimbursed to citizens, especially to low income in-

dividuals who depend squarely on Carbon intensive goods. The results of this

research suggest that other high emitting provinces such as Alberta, Quebec

and Ontario should join the fight against climate change. Although Quebec

and Ontario just recently introduced the cap and trade system which has been

identified to have lots of challenges, a combination of several carbon pricing

models would lead to more efficient result. Conclusively, the carbon tax is one

of the many solutions to fight global warming, but a comprehensive climate

change plan will have to include many other measures to achieve the desired

emissions target.

Some shortcomings of the research is failure to exploit the time series struc-

ture of my data. Statistical issues like stationarity, volatility of error terms

are ignored. Also the difference-in-difference methodology fail to account for

differences in trend accounted for by other factors. For subsequent research

one would encourage better choice of control and sample size

Unless we decide to reduce greenhouse gas emissions within just a few years

from now, our destinies will already be chosen and our path towards hell

unalterable as the carbon cycle feedbacks · · · kick in one after another

Mark Lynas

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References

Jean Bernard, Grant Guenther, and Maral Kichian. Price and carbon tax effect on gasoline

and diesel demand. 2014.

K. Harrison. A tale of two taxes: The fate of environmental tax reform in canada. Review

of Policy Research, 29:383 407. doi:, 10., 2012.

Kevin A. Hassett, Aparna Mathur, and Gilbert E. Metcalf. The incidence of a u.s. carbon

tax: A lifetime and regional analysis. Technical report, National Bureau of Economic

Research, november 2009.

Gilbert E. Metcalf. ”a conceptual framework for measuring the effectiveness of green fiscal

reforms”. 2015.

Nicholas Rivers and Brandon Schaufele. Salience of carbon taxes in the gasoline market.

Available at SSRN, 2014.

Jessica McClay Stewart Elgie. Bc’s carbon tax shift is working well after four years (”atten-

tion ottawa”). Canadian Public Policy / Analyse de Politiques, 39:S1–S10, 2013. ISSN

03170861, 19119917.

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7 Figures and table

Table 1: Revenue Neutrality of BC Carbon Tax Rivers and Schaufele [2014]

CarbonTax

Carbontax

Average ProvincialProvincial CorporateProvincial small

($/tonnes) (Cents/litre) personal income income tax businesstax rate(%) tax(highincome%) rate (lowin-

come%)July1,2007

0 0 8.74 12 4.5

July1,2008

10 2.34 8.02 11 3.5

July1,2009

15 3.33 7.89 11 2.5

July1,2010

20 4.45 7.86 10.5 2.5

July1,2011

25 5.56 7.83 10 2.5

July1,2012

30 6.67 7.72 10 2.5

4

4All non-carbon tax rate changes enacted on January 1st. In column 2, $/tonne refersto the price in Canadian dollars per carbon dioxide equivalent tonne. Column 3 displaysthe tax in cents per litre of unleaded liquid gasoline as calculated by the BC Ministry ofFinance. The Personal Income Tax rates displayed in Column 4 are the average provincialtax rate for a household earning a nominal income of $100,000 per year up to the point ofthe tax change (i.e., the tax rate is calculated such that all income is assumed to be earnedinstantaneously on July 1st. Column 5 presents the corporate tax rate for business profitsthat are greater than the provincial business. The Small Business Tax rate as shown inColumn 6 applies to net income that is less than the small business limit

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Table 2: Summary statistics for BC before 2008

Variable Mean Std. Dev. Min. Max.GASOLINE SALE 4,532,539 20,596 4,507,834 4,554,406DIESEL SALE 1,711,683 64,248 1,647,352 1,796,611GASOLINEPRICE 94.7 10.8 81 106DIESELPRICE 93.1 11.8 76 102.4UNEMPLOYMENT RATE 5.5 1.3 4.3 7.1POPGROWTH 1 0.2 0.8 1.2

Table 3: Summary statistics for BC after 2008

Variable Mean Std. Dev. Min. Max.GASOLINE SALE 4,464,507 99,424 4,336,807 4,560,666DIESEL SALE 1,888,162. 238,228 1,647,876 2,221,338GASOLINEPRICE 127.1 16.2 103.4 144.1DIESELPRICE 128.2 20.5 95.5 148.7UNEMPLOYMENT RATE 6.8 1.2 4.6 7.7POPGROWTH 1.1 0.3 0.8 1.4

Table 4: Summary statistics 3

Gasoline Sale Gasoline pricesmean StdDev mean StdDev

BC 4,391,931 188,744 81.1 35.99Quebec 7,908,539 395,469 81.76 34.99Alberta 4,847,533 68,250 67.6 31.52

Rest of Canada 2,879,764 4,803,658 77.88 33

unemployment population growthmean StdDev mean StdDev

BC 7.1 1.4 1.28 0.73Quebec 8.7 1.3 0.7 0.3Alberta 5.05 1.04 2 0.53

Rest of Canada 9.2 3.7 0.3 0.7

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Table 5: Regression result for natural log of gasoline consumption

(1) (2)VARIABLES All province 3 province

BC 0.316* -0.377***(0.190) (0.0263)

Post2008 0.0522 -0.0797(0.317) (0.0477)

BCPost2008 0.223 -0.143***(0.272) (0.0487)

trend -14.33* -1.277(7.654) (1.144)

Gasprice 1.418* 0.559***(0.842) (0.107)

Unemployment rate -0.120*** 0.0713***(0.0264) (0.0111)

Population growth 0.587*** -0.0451**(0.109) (0.0212)

Constant 7.674* 12.74***(4.289) (0.528)

Observations 180 54R-squared 0.384 0.933

Robust standard errors in parentheses*** p<0.01, ** p<0.05, * p<0.1

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Table 6: Regression result for natural log of diesel consumption

(1) (2)VARIABLES All province 3 province

BC 0.0942 -0.667***(0.175) (0.0279)

Post2008 0.0218 -0.177**(0.304) (0.0669)

BCPost2008 0.360 0.0609(0.290) (0.0658)

trend -11.05* 1.738(6.451) (1.145)

Dieselprice 1.116 0.357***(0.681) (0.110)

Unemployment rate -0.195*** 0.0309**(0.0308) (0.0130)

Population growth 0.524*** 0.0488(0.105) (0.0340)

Constant 9.040*** 13.28***(3.436) (0.572)

Observations 180 54R-squared 0.461 0.914

Robust standard errors in parentheses*** p<0.01, ** p<0.05, * p<0.1

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Table 7: Regression result for natural log of total consumption

(1) (2)VARIABLES All province 3 province

BC 0.237 -0.455***(0.188) (0.0227)

Post2008 0.0772 -0.0987**(0.311) (0.0399)

BCPost2008 0.245 -0.0987**(0.277) (0.0382)

trend -14.72* -0.284(7.580) (0.923)

Gasprice 1.492* 0.490***(0.832) (0.0818)

Unemployment rate -0.141*** 0.0596***(0.0268) (0.00949)

Population growth 0.576*** -0.0120(0.107) (0.0214)

Constant 7.847* 13.55***(4.240) (0.400)

Observations 180 54R-squared 0.415 0.948

Robust standard errors in parentheses*** p<0.01, ** p<0.05, * p<0.1

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Table 8: Ashenfelter Dip

(1)VARIABLES Ashenfelter Dip

BC -0.456***(0.0281)

Post2008 -0.0989**(0.0393)

BCPost2008 -0.104**(0.0501)

Post2005 0.00692(0.0432)

BCPost2005 0.00676(0.0418)

trend -0.262(0.961)

Gasprice 0.480***(0.101)

Unemployment rate 0.0601***(0.0109)

Population growth -0.0121(0.0269)

Constant 13.59***(0.474)

Observations 54R-squared 0.948Robust standard errors in parentheses

*** p<0.01, ** p<0.05, * p<0.1

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Figure 1: The national indicator tracks seven GHGs: carbon dioxide (CO2),methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6), perfluoro-carbons (PFCs), hydrofluorocarbons (HFCs) and nitrogen trifluoride (NF3)released by human activity (reported in Mt of CO2 eq). Canada signed theCopenhagen Accord in December 2009, thereby committing to reducing itsGHG emissions to 17% below 2005 levels by 2020. Source: EnvironmentCanada (2015) National Inventory Report 1990a2013: Greenhouse Gas Sourcesand Sinks in Canada

613 605 623 625646 664

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EMISSIONS BY PROVINCE IN 1990,20005 AND 2013

1990 greenhouse gas emissions (megatonnes of carbon dioxide equivalent)

2005 greenhouse gas emissions (megatonnes of carbon dioxide equivalent)

2013 greenhouse gas emissions (megatonnes of carbon dioxide equivalent)

2 illustrates the total emissions by each province and territory for the years1990, 2005 and 2013 in megatonnes of carbon dioxide equivalent (Mt CO2 eq)

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GASOLINE SALE BC GASOLINE SALE QUEBEC

GASOLINE SALE ALBERTA AVG IN OTHER PROVINCE

Gasoline Consumption

Figure 2: GASOLINE SALES TRENDFrom the figure the blue line represent the sale of gasoline in BC and there is adrop from 2008 indicated by the vertical orange line.Alberta also implementeda Carbon restricting policy and the plot reveals a gentle rise which beginsto have a very steep rise in 2010.The rest of Canada has a continous rise inGasoline

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Diesel Consumption

Figure 3: DIESEL SALES TRENDFrom the figure the blue line represent the sale of Diesel in BC and there isa drop from 2008 indicated by the vertical orange line.There seem to be abig rise starting in 2010 which could be as a result of BC government changefrom Hydrogen buses to Diesel buses. Alberta also implemented a Carbonrestricting policy and the plot reveals a gentle rise which begins to have a verysteep rise in 2010.The rest of Canada has a continous rise in Gasoline