These comments are being…

These comments are being submitted on behalf of London Health Sciences Centre (LHSC), a large acute care teaching hospital that is reporting approximately 43,000 tonnes of greenhouse gas (GHG) emissions to the Ministry of the Environment and Climate Change (MOECC/MECP) each year. As former participants in the Cap and Trade program we would like to provide comments on two matters concerning the Cap and Trade Cancellation Act to assist the ministry in assessing the implications for hospitals in Ontario. The first matter relates to establishing GHG reduction targets alongside the removal of hospital funding for GHG reduction initiatives. The second relates to the potential impact of the Federal government imposing a carbon tax pricing system if the provincial climate change plan does not meet federal approval.

Hospitals are Under Immense Financial Strain
Ontario hospitals receive the majority of their funding from the Province of Ontario in accordance with budget policies established by the Ontario Ministry of Health and Long-Term Care (MOHLTC), the South West Local Health Integration Network (SW-LHIN) and Cancer Care Ontario (CCO). As it is, hospitals must often rely on external funding and long-term debt agreements to undertake vital capital projects that are not possible under the current budgetary policies and constraints. These debt obligations must be covered by under spending of the provincial allotment for health services while continued patient care demands create further unbudgeted pressures. London Health Sciences Centre specifically has seen the sixth straight year that revenues have not kept pace with inflationary costs.

No Funding for Greenhouse Gas Emission Reduction Projects
Although hospitals are committed to the Provincial Government setting targets for the reduction of greenhouse gas emissions, no funding has been provided through the MOHLTC to support hospitals to that end. Under the Cap and Trade program, hospitals for the first time received full funding for energy efficiency related projects through the Hospitals Energy Efficiency Program (HEEP). London Health Sciences Centre was able to complete two major GHG reduction projects totaling $1.6 million that would have otherwise been impossible. Applications were completed for 2018 HEEP funding that would have led to GHG emission reductions of another estimated 4% before the program was canceled. The Ministry of Health and Long Term Care reported that 180 projects in 98 hospitals were completed the first year, collectively removing five mega-tonnes of carbon dioxide from the environment.

In addition, LHSC has applied to the Low Carbon Economy Leadership Fund for fifty percent coverage of another GHG reduction project. There is concern that the repeal of the Low Carbon Economy Act could result in the discontinuance of this federal funding as well. Without these types of supplemental funding, hospitals will again be extremely limited in how they can meet provincial targets for GHG emissions.

Federal Backstop Program VS Cap and Trade
Under the Cap and Trade program, hospitals with a compliance obligation were provided with one hundred percent free allowances through the Direct Allocation method as a public institution providing a public service. Smaller hospitals were allowed to opt-in to the program instead of paying pass through costs from their local fuel distributers. Aside from some administrative costs, the cost of the Cap and Trade program for participating hospitals was essentially zero and patient care funding from the MOHLTC was not subject to unbudgeted pressure from the Ministry of the Environment and Climate Change (MOECC). There was economic certainty for hospitals through Cap and Trade until 2020 and participating hospitals were taking the time they had to prepare for any expected changes post 2020.

Should the Federal Backstop program take the place of the Cap and Trade program, hospitals will have zero cost relief under the current proposal and no mechanism to cover the additional cost through the current healthcare budget policies. Policies need time and measures of certainty in order to be written effectively to manage regulatory changes, especially where hospitals and funding are concerned. The timely switch of the Cap and Trade program to a Federal Backstop program does not allow for necessary internal adjustments to be made for the healthcare sector. According to the Ontario Hospital Association, the annual aggregate natural gas consumption for 146 hospitals is 260 million cubic meters. This will put an additional strain on patient care dollars of over $10 million in 2019 and over $25 million by 2022. London Health Sciences Centre alone will experience a cost increase of approximately $3 million by 2022.

We would ask that consideration be given to these two matters as the Cap and Trade Cancellation Act writes GHG targets, repeals the Low Carbon Economy Act, and develops a Climate Change Action Plan. Hospitals are operating within a finite budget and a defined mandate for public health services as set out by the governing bodies mentioned above. They will continue to need special attention where the additional pressure of carbon costs and GHG emission reduction funding for provincial targets are concerned.