The chill on Kathleen Wynne’s cap and trade scheme

As Wynne's approval ratings hit an all-time low, Conservative critics are now beating the drum against cap and trade, but the costs of doing nothing on climate change will be much higher

While you were cursing the extra bourbons you swilled at the close of a notoriously crummy year, Conservative pundits were already penning copy blaming their New Year’s headaches on Ontario’s latest green policy resolutions.

The province’s new cap and trade scheme kicked in January 1, slapping a price on carbon pollution for most major greenhouse gas emitters – and critics in the press are howling that we’ll now be paying through the nose to drive to work, heat our homes, buy food and keep the lights on. 

“Ontario’s plan: destroy jobs, save the planet,” screamed Margaret Wente’s headline in the Globe. It’ll be “catastrophic,” threatened others.

Pollsters suggest hydro bills have already dethroned the Wynne government, whose approval ratings have hit record lows (hovering around 15 per cent). 

To help quell voter discontent, the province has axed the 8 per cent HST on hydro bills (effective January 1) and cancelled billions in new green energy projects, all while pumping some $32 billion into what many have deemed unnecessary nuclear plant refurbishments. 

Conservatives are now beating the war drum against cap and trade. 

PC Opposition leader Patrick Brown recently said he’d dismantle the whole program and replace it with (wait for it) a carbon tax, albeit a “revenue neutral” one like BC’s, so voters get income tax rebates to offset increases in the price of fossil fuels. 

It’s a clever populist move, even if it won’t keep prices for consumers down, University of Ottawa public and international affairs professor Nicholas Rivers tells NOW. He and U of Calgary economics prof Trevor Tombe did their own number-crunching for both Alberta’s new carbon tax and Ontario’s new cap and trade scheme and concluded that the “heated political rhetoric that suggests carbon pricing will lead to skyrocketing price increases throughout the economy is misplaced at best and misleading at worst.” They say this is particularly true given the low-income supports already in place in both provinces.

How much more are consumers really going to pay for basics?

The government, Ontario’s auditor general and other independent analysts have estimated that the costs to households should come to about $150 more per year for fuel in 2017 (rising to $210 in 2019, plus about $75 in indirect costs on goods and services that year).

Much to the chagrin of enviro critics, Ontario’s auditor general recently suggested that the province’s cap and trade scheme itself will only take us 20 per cent of the way to our emissions reductions goal. But Environmental Defence’s Keith Brooks says the AG missed the point. The cash from cap and trade is earmarked for programs that should help get us the rest of the way there.

He says that tearing up the cap and trade scheme and destroying billions in pollution permits will only throw a wrench in the markets and throttle momentum on climate action.

Adds Greenpeace’s Keith Stewart, “All pollution has a cost, and climate has a potentially devastating one it just hasn’t been on our energy bill. We need to stop pretending that we can use the air we breathe as a free dump.” 

Will cap and trade spike energy bills?

There’s no denying Ontario’s electricity rates have soared in the last decade, making them the highest in Canada (though lower than in many major American cities). 

While mounting bills for costly multi-billion-dollar nuke refurbishment, aging infrastructure overhauls and pricey new and cancelled gas plants get largely forgotten, in truth any coming increase to your utility bill will be pretty unrelated to cap and trade. That’s partly because the province will be using the estimated $1.3 billion in cash generated from cap and trade to offset electricity bills. 

How much more will gassing up cost?

A little – roughly 4¢ more per litre in 2017, according to government estimates. That’s not much considering Ontarians were already paying a good 30¢ more per litre in 2014, for no particular planet-saving reason, but because of the vagaries of the oil and gas market. Beyond that, any upward climb at the pumps will likely come from global increases in the price of crude forecast for the coming year. But, hey, if the threat of paying more for a tank scares Canadians away from the pickup trucks we’ve been buying since prices nosedived a couple of years ago, then go ahead and credit cap and trade.

What about natural gas prices?

Depends on your utility provider, but Enbridge customers will pay about $6.70 more a month. That’ll be tacked on to the delivery charge. Still, Minister of Environment and Climate Change Glen Murray has said natural gas prices will “remain lower in 2017 than they have been during recent peak periods – even when factoring in the cost of cap and trade.”

Will food prices go up, too?

Families are expected to pay 3 to 5 per cent more (or about $420) this year for groceries, according to Canada’s Food Price Report. 

But critics can’t blame this one on cap and trade. The report’s authors largely finger the low Canadian dollar and warn that Trump’s crackdown on illegal immigrants could make American-grown produce significantly more expensive this year. 

Rivers and Tombe expect carbon pricing’s impact on the cost of shipping our food to be pretty minor. They say a 1 per cent increase in transport costs (as Alberta truckers just announced) would contribute to at most a 0.1 per cent increase in our bills in the checkout aisle. California’s lingering drought is responsible for way bigger price increases than that. 

What’s the cost of doing nothing?

In 2014, the White House’s Council of Economic Advisers pegged the cost of climate inaction for the United States alone at $150 billion a year. Said the Council, “These costs are not one-time: they are incurred year after year because of the permanent damage caused by additional climate change resulting from the delay [in climate-change-curbing action].” 

Time to start owning up to the reality that climate action is still cheaper than not preparing for the coming storm. | @ecoholicnation

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