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Ontario Votes: Metal Entrepreneur Says Carbon Pricing Saved His Business

With tomorrow’s provincial election too close to call, and one of the leading candidates for premier committed to phasing out the province’s carbon cap-and-trade program, a Cambridge, Ontario entrepreneur is crediting carbon pricing with keeping his metal fabrication business afloat.

“To politicians who propose to dismantle government initiatives that help prepare Ontario’s businesses for the low-carbon economy, I say it would be folly to stamp them out. It only exposes Ontario businesses to greater risk,” writes VeriForm Inc. President and founder Paul Rak in a Toronto Star op ed. “In many ways, I owe my company’s survival right now to a definitively low-carbon advantage.”

Rak credits the steps he took to prepare for a low-carbon economy with protecting his company from the aluminum and steel tariffs imposed by the Trump administration last week.

“The cost-saving innovations that VeriForm introduced to reduce carbon emissions and to adapt to the low-carbon economy, beginning in 2006, are a big part of why we will weather the current Trump storm,” he writes. “It’s also what puts me firmly in favour of environmental regulations, including Ontario’s cap-and-trade system, which has been putting a price on carbon since January 2017. These initiatives push businesses to become competitive in the fast-evolving low-carbon economy, and to develop a low-carbon advantage that can make them more resilient.”

The changes at VeriForm began in 2006, when Rak introduced $46,000 in equipment upgrades and energy efficiency improvements—not because carbon pricing was driving the decision, but because government incentives made it easier.

“The outcome was astonishing,” he writes. “In the first year, our energy costs dropped by 58%. The equipment improvements paid themselves off in six months. Over the following 11 years, we instituted another 100 small and large efficiency upgrades to cut our utility costs even further,” while an in-house green team found “simple, low-tech solutions” to save energy and money.

All told, “these investments have added up to more than C$2 million in cost savings, helping to keep the business afloat during the recession and positioning us to grow our work force by 25,” Rak writes. Along the way, the company cut its carbon emissions 77%, from 262 to 60 tonnes per year.

“If every polluter in Canada achieved this level of reduction, we would meet our 2030 targets under the Paris Agreement twice over,” he notes. “VeriForm managed to achieve this in just 12 years, with the majority of our financial returns materializing in the first three to four years.”

VeriForm’s analysis based on that experience showed that every tonne of carbon the company emitted cost it $900. “That’s a startling figure, considering that Ontario charged just $18 per tonne through its 2017 cap-and-trade auctions,” he notes.

Meanwhile, environmental lawyer Lisa DeMarco of the Toronto law firm DeMarco Allan is attaching a high big-picture price tag to any effort by a future premier Doug Ford to withdraw Ontario from its cap-and-trade relationship with Quebec and California, calculating it would cost the province $2 to $4 billion to leave the market.

“That is in addition to a loss of some $2 billion in annual revenue the program raises from polluters,” National Observer notes. “Those funds are earmarked for further emission-reducing initiatives such as home and business retrofits, and electric vehicle subsidies and charging infrastructure.”

DeMarco told Observer the down sides of ending cap-and-trade would include the cost of buying back allowances Ontario has already bought to cover emissions past 2020, plus up to $100 million in litigation. “You can imagine our neighbours to the south are not as conciliatory in general as Canadian companies, and I imagine there will be significant litigation associated with that,” she told Observer’s Alastair Sharp.

With the election in the offing, Rolly Montpelier at Below2C is out with a comparison of the four major parties’ positions on carbon pricing, fossil subsidies, greenhouse gas emission targets, and more.