October 11, 2018 Ministry…

October 11, 2018

Ministry of Environment, Conservation and Parks
Climate Change Directorate
135 St. Clair Avenue West
Toronto, Ontario M4V 1P5

EBR 013-3738 - Bill 4: Cap and Trade Cancellation Act, 2018

The Ontario Society of Professional Engineers is the voice of the engineering profession in Ontario. OSPE was formed in 2000 after members of Professional Engineers Ontario (PEO) voted to separate regulatory and advocacy functions into two distinct organizations. We elevate the profile of the profession by advocating with governments, offering valued member services and providing opportunities for ongoing learning, networking and community building. We represent the entire engineering community, including professional engineers, engineering graduates and students who work or will work in several of the most strategic sectors of Ontario’s economy.

The Environment Task Force of OSPE was formed to consolidate discussion and advocacy efforts in environmental policy in Ontario.

OSPE is pleased that Minister Phillips has publicly announced that the Ontario Government “is aware of the global threat that climate change presents and shows ongoing leadership in the fight to reduce greenhouse gas emissions” (Sept. 24, 2018). However, as expressed in a letter to the Minister on August 10, 2018, OSPE is concerned that Ontario’s cancellation of the cap and trade program without a full costing or alternative carbon reduction plan threatens to significantly harm Ontarians - having a far reaching and multi-generational negative impact.

OSPE supports the government’s inclusion in Bill 4 that it establishes a requirement for the Minister to prepare a climate change plan and to prepare progress reports in respect of the plan.

However, a slogan of the new government is that Ontario is “open for business”. Cancelling cap and trade, including already contracted projects, throws this into uncertainty. The Environmental Commissioner of Ontario has stated that as of 2018, Ontario’s cleantech industries now employ 130,000 Ontarians and generate $19.9 billion in annual revenue. Significant jobs and entire businesses will be at risk and even lost as a result of cancelling green energy projects, including cap and trade.

Indeed, Forbes Magazine in an August 2018 issue said, “by backsliding on climate, Ontario may have just cost businesses billions, added millions in consumer costs, eschewed thousands of jobs and muddied its investment outlook.” Furthermore, the impact of increased carbon emissions and the elimination of carbon reduction programs will ultimately be felt by homeowners, companies and the government with added insurance, firefighting, healthcare and other costs related to severe weather patterns.

The Insurance Bureau of Canada has seen insured losses from extreme weather in Canada rise from $400 million a year to $1 billion a year, and they attribute this trend to climate change. Wildfire suppression costs have gone up by 176% from 1970 to 2010 and could double again due to climate change. According to the Government of Canada, Canadian climate change costs appear to be on track to escalate from roughly $5 billion per year in 2020 to between $21 billion and $43 billion per year by the 2050s. These numbers are moderate projections for Canada alone; they do not capture the global threat of irreversible and abrupt changes to the Earth's ecosystem, nor do they measure our ethical liability to international populations who will lose their homes or their lives because of Ontario's delay in taking action. Global climate change already claims more than 150,000 lives per year from the rising incidence of disease, heat waves, and crop failures.

Without programs to decarbonize our economy, indirect costs will be much higher (e.g., infrastructure replacement costs, disaster recovery costs, rising food costs, deeper water well drilling costs, increased insurance costs, etc.). These increased costs, which will be ultimately borne by consumers and taxpayers, will be directly attributed to the Government of Ontario’s decision to eliminate these programs. For example, home insurance rates are skyrocketing due to increased instances of fires, flooding, and catastrophic storms, such as the tornados that recently hit the Ottawa area. Indeed, the 2018 Nobel Prize in Economics was bestowed to two economists that model such scenarios concerning how societies and economies are affected by climate change.

Some may believe that Ontario is already a ‘clean energy’ province; however, this is not true. Ontario’s electricity grid has very low emissions; however, electricity only represents 20% of Ontario’s energy use – the other 80%, mainly for heating and transportation, rely almost entirely on fossil fuels, producing significant emissions. Canada’s per capita emissions received a “D” grade from the Conference Board of Canada’s ranking with international peers.

OSPE urges the government to seriously consider the Environmental Commissioner of Ontario’s recently released report ‘2018 Greenhouse Gas Progress Report’. A specific statement concerning Bill 4 is particularly pertinent – “If Bill 4 passes as is, Ontario will have no statutory emission targets, no pathway to achieve meaningful targets, weak reporting, no financial incentive for climate polluters to reduce their emissions, and no dedicated source of funding to invest in solutions”.

Furthermore, the United Nation’s Intergovernmental Panel on Climate Change (IPCC) just released a report that comes with a dire warning that if climate change is not addressed immediately, severe environmental and economic consequences will be forthcoming sooner than we expected. The report was prepared by 91 authors and review editors and 6,000 scientific references were cited. “One of the key messages that comes out very strongly from this report is that we are already seeing the consequences of 1°C of global warming through more extreme weather, rising sea levels and diminishing Arctic sea ice, among other changes,” said Panmao Zhai, Co-Chair of IPCC Working Group I.

In an effort to pre-empt the consequences of climate change, OSPE is calling on the provincial government to delay the progression of Bill 4 until A) a replacement program to reduce carbon emissions is developed and B) Ontario’s Financial Accountability Officer reviews the costs associated with the cancellation of the cap and trade program.

OSPE remains committed to establishing a dialogue with the government to explore alternative strategies to responsibly combat climate change and reduce carbon emissions in Ontario. Under the Professional Engineers Act, engineers have a sworn duty to safeguard life, health, property, economic interests, the public welfare, and the environment.

Ontario’s professional engineers are experienced at reducing carbon emissions in almost every sector of Ontario’s economy, including the achievement of significant gains in Ontario’s clean electricity system. Engineers are capable of leveraging their unparalleled knowledge and experience to inform legislation and regulatory amendments to achieve Ontario’s emission reduction targets. But in order to deploy their talents across the free market, the province must incentivize emission reductions by putting a price on carbon pollution.

According to Canada's Ecofiscal Commission, carbon pricing, whether a cap-and-trade system which was developed by Conservatives as a market-based solution, or a carbon tax, is the lowest cost way to achieve emission reductions. An increasing carbon price should be the centrepiece of Ontario’s plan to reduce greenhouse gas emissions. To act on this commitment, OSPE requests to be invited to consult with the government in an advisory capacity to demonstrate how our province can successfully achieve these objectives.

We see that the draft Bill 4 includes a mechanism for financially compensating companies that purchased Ontario allowances and offsets in the WCI system. We caution that the Ontario Government may not be able to verify these purchased Ontario allowances and offsets because the Registry of WCI allowances and offsets is a secret Registry, in an office in California. Not even the Provincial Auditor of Ontario is allowed to see the Registry. Furthermore, there does not appear to be any “Duty to quantify emissions” as in section 9 of the Climate Change Mitigation Act and we would encourage the government to legislate that industry should be obligated to quantify and report emissions.

There are many options to reduce carbon and address climate change, but none of these alternatives are free of costs. Ontario’s professional engineers are world-class optimizers and problem solvers who understand how to develop efficient systems that most effectively combat climate change while respecting tax dollars, protecting jobs, and growing the economy.

OSPE stands ready to work with the government to deliver on its vision of growth, prosperity, and a cleaner environment for the benefit of all Ontarians.