New Ontario Government Vows to Scrap Cap-and-Trade as First Act in Office

Ontario Premier-Designate Doug Ford is vowing to scrap the province’s carbon cap-and-trade system as his government’s first legislative action after he’s sworn in later this month.

During the provincial election campaign, he also promised to cut provincial gas taxes by 10¢ per litre.

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“Cap-and-trade accounted for around $1.9 billion in revenue last year, while the fuel tax brings in $2.7 billion in revenue,” notes CBC News. “Under the province’s current legislation, a system first adopted by Quebec in 2013, revenue was invested in programs that reduce emissions and help businesses and consumers adapt to a low-carbon economy.”

But “in Ontario, the carbon tax’s days are numbered,” Ford told media Friday. “I promised that we would make life more affordable in Ontario. I promised we would reduce gas prices and respect your hard-earned money,” he added, referring to an upcoming decision expected to cost Ontario taxpayers C$2 to $4 billion.

When reporters asked about Ontario businesses that have already invested an estimated $1.9 billion in carbon controls under cap-and-trade, Ford suggested the companies “will be quite happy that they won’t be paying in the future”.

But Ford may be about to find out that broad pronouncements with limited details are easier on the campaign trail than when you’re trying to run Canada’s largest province.

“This means no more money to help businesses become more energy efficient, no money for social housing energy retrofits, and no money for colleges, universities, and hospitals to reduce their energy use,” said Environmental Defence Programs Director Keith Brooks.

“Ontario is one of over 70 jurisdictions globally, with more joining every year—including China, Alberta, and British Columbia—that is pricing carbon pollution,” added Sara Hastings-Simon, the Pembina Institute’s managing director, clean economy. “Through the Western Climate Initiative, Ontario has built a good partnership with Quebec and California that is delivering results and reducing emissions. This is a clear recognition that a price on carbon enhances competitiveness and innovation for industry, and is indispensable in reducing emissions in a cost-efficient way.”

Hastings-Simon added that, “with little in the way of details, it is impossible to understand how an ‘orderly wind-down’ can be implemented.” But “the previous cap-and-trade auctions have all sold out, and allowances already purchased by companies represent over $2.8 billion of revenue raised in Ontario. If cap-and-trade is ended, there is no information on how the incoming government will cover this hole in the budget.”

Nathaniel Keohane, Senior Vice President for Climate at the U.S. Environmental Defense Fund, agreed that Ford’s decision “to abandon Ontario’s market when it was showing clear signs of stability and success is a significant step backward for the province, and the ‘go-it-alone’ approach will cost Ontario more down the road. California and Quebec will continue their successful linkage, and will continue to drive emission reductions and grow the low-carbon economy.”

Federal Environment and Climate Change Minister Catherine McKenna has already emphasized that Ontario will be subject to the federal floor price on carbon if it cancels its own program, and her spokesperson reiterated the point in response to Ford’s announcement.

“A price on pollution is an essential part of any serious climate plan,” said press secretary Caroline Thériault. “Ontario’s current pollution pricing system meets the federal standard. If the new government changes or eliminates its system, that assessment may change and the federal price on pollution would apply.”