Re. Supporting Strong Action…

Re. Supporting Strong Action on Climate Change:
Comments on Bill 4, Cap and Trade Cancellation Act, 2018

Dear Premier Ford and Ministries of the Government of Ontario;

The following are my comments on Bill 4 and comments on matters related the people of Ontario's obligation to address the climate change challenge:

1. Ontario’s election outcome was not necessarily a condemnation of a price on carbon pollution. It was a vote ‘for change’ given the Liberal’s 15 year tenure, and of course certain policies not agreed upon.

2. The Cap and Trade program should not be repealed unless and until it is replaced by an effective OPC branded climate change program. Of the $2.8 bn collected to date from the current program, 74% is aimed at reducing GHG emissions from the tightly funded public service sector and schools. These initiatives should not be pulled.

3. Given the dire climate change predictions from the recent IPCC report, and the recent Nobel Prize for Economics to William Nordhaus for his work on carbon pricing, it would be irresponsible to not set a price on carbon pollution. In the Netherlands, the 2015 Urgenda Climate Case against the Dutch Government was the first in the world in which citizens held their government accountable for contributing to dangerous climate change. Perhaps a scenario that will play out in other jurisdiction pending the extent and severity of damage.

4. Carbon pricing should be re-branded. Pricing carbon is an effective market mechanism. However to work we must avoid using the word TAX. It has severe negative connotations. Perhaps the word fee or fine or levy for dumping carbon in the air we breathe would be better perceived and accepted. From the view of economists, a tax is a non-penal, yet compulsory transfer of resources from the private to the public sector, levied on a basis of predetermined criteria and without reference to specific benefit received. Perhaps it's time to equate fee or fine on carbon as a levy that benefits all.

5. Part of the impetus to repeal the Cap and Trade program was to remove the 4¢ fee (tax) applied to gasoline at the pump to the benefit of the consumer. Interestingly, the consumer has and will reluctantly adapt to the fluctuations of gas pump prices from the oil companies as it bounces between 90¢ to $1.40. The 4¢ cents removal is good optics for political purposes, however the perceived gain will likely be short lived as oil companies will not hesitate to move prices exploiting the gap from the OPC removal of the fee (tax).

6. Ontario has been successful in modifying its electricity generation mix to significantly reduce carbon emissions. However, IESO’s 2018 Technical Planning presents an increase in GHG emission scenario from 2017 onwards. Increase GHG to generate electricity implies an increase in gas usage which implies electricity pice increases for Ontarian’s contrary to the government’s mandate. Higher gas future prices and the imminent carbon fee, despite designating the electricity sector as emission-intensive and trade-exposed (EITE). International pressure will likely reverse this. Under the current Cap and Trade, electricity was not considered EITE.

7. Ontario recently eliminated the Electric Vehicle (EV) support program because it appeared to favored those who could most afford them. Given that the transportation sector is the largest contributor to Ontario’s GHG emissions at 35% - vs industry 30%, electricity at 3% - consideration should be given to setting incentives for EV or ZEV (zero emissions vehicle) in to the lower and middle range prices cars to suit a larger percentage of consumers and businesses. Perhaps Ontario auto manufacturer should be incentivized to build these and capitalize on Canada’s low GHG emissions electricity markets; Ontario, Quebec and Manitoba and low GHG emitting electricity markets.

Michel Fortin