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Ontario Election Memo: ‘Cap-and-Trade is Working. Leave It Alone.’

With Ontario voters going to the polls in just 37 days, it’s a shame that the province’s successful carbon cap-and-trade program is becoming an issue in the campaign, the heads of two leading health care and environment organizations argue in a recent Toronto Star op ed.

“The claim that cap-and-trade or carbon pricing will kill jobs might be powerful rhetoric, but it’s not true,” write Doris Grinspun, CEO of the Registered Nurses Association of Ontario and Tim Gray, Executive Director of Environmental Defence. “The province added more than 155,000 new jobs in 2017, the first year of cap-and-trade.”

Grinspun and Gray note that cap-and-trade is already working in other jurisdictions, from California to Quebec to the UK, and it’s working in Ontario, too. “The program has been running for over a year now,” they write. “It hasn’t damaged the economy or cost jobs, but it is starting to cut carbon and spurring a low-carbon transition.” The first year of cap-and-trade was “a very strong year for Ontario’s economy,” they add, with unemployment at a six-year low and below the national average.

While emissions data for the province’s first year of cap-and-trade isn’t available yet, the op ed points to positive signs: emitters bought virtually all the carbon permits put up for auction, and the province’s natural gas use began to decline, even as it increased across the rest of Canada.

“During 2017, manufacturing employment grew by 4.5%, while industrial natural gas use shrank by 15%,” Grinspun and Gray stress. “This was even before Ontario started its annual ratcheting down of its carbon cap in 2018, which suggests the price signal is already working.

Meanwhile, the dollars raised through cap-and-trade funded a rebate program that helped drive a 120% increase in electric vehicle sales. “All told, the province raised C$2.4 billion so far from the sale of permits from cap-and-trade, all of which must, by law, be reinvested into programs that reduce polluting emissions.”

That requirement shows that “cap-and-trade acts like a carrot and stick,” they add. “The hard cap forces emissions down, while the money raised helps homeowners, colleges and universities, and industry reduce their emissions. It’s a powerful tool to drive a low-carbon transition.”

While Conservative leader Doug Ford has vowed to cancel the program, the op ed’s opening message is simple: “Cap-and-trade is working. Leave it alone.” Ford hasn’t indicated how he would replace the revenue from the program if he discontinued it (nor has he promised to deliver a fully-costed election platform), but Grinspun and Gray make a larger point.

Doing away with cap-and-trade won’t help the economy. Ontario’s economy is doing fine with it in place. And getting rid of it certainly won’t help the environment. Ontario’s industry has embraced cap-and-trade, so there’s no reason to change course.” Against those factors, the program “should stay in place and continue to do its work to reduce pollution in the province and help Ontario citizens transition to a low-carbon future.