Ontario’s new climate-change plan will cost the average household $13 a month — far less than a carbon tax that would have meant a monthly hit of up to $107, according to an internal report on the scheme.
Premier Kathleen Wynne’s cap-and-trade proposal to reduce greenhouse gas emissions, enshrined in legislation expected to pass Wednesday, will drag on the economy by 0.03 per cent in 2020.
Growth forecast to be 11 per cent between 2015 and 2020 will be adjusted downward to 10.97 per cent, having roughly the same effect on the provincial economy as a statutory holiday.
That’s according to a government draft obtained by the Star of the “impact modeling and analysis” of Ontario’s new carbon-pricing program being done along with Quebec and Ontario.
Prepared by EnviroEconomics, which advises governments on the economic effect of environmental policy changes, the report warned a carbon tax on fuels to curb emissions would be more expensive for consumers.
Under Wynne’s plan, gasoline prices will rise by 4.3 cents a litre and the average monthly natural gas bill will jump $5 next year.
“Households will experience some cost increase related to carbon pricing. The average energy costs to households for building energy and transport could rise in the order (of) $13 per month in 2017,” said the EnviroEconomics study.
In all, the system will bring in an additional $1.3 billion annually to the treasury, which, by law, must spent on environmental initiatives such as retrofitting inefficient buildings and boosting the number of charging stations for electric cars.
But to achieve Ontario’s ambitious targets — cutting greenhouse gas emissions to 15 per cent below 1990 levels by 2020, 37 per cent by 2030, and 80 per cent by 2050 — a carbon tax on fuels would have been even more costly.
“With alternative options, household costs could be four to eight times higher,” the EnviroEconomics study said of carbon taxes.
The firm concluded the average household would spend between $48 and $107 more a month if carbon taxes were slapped directly on gasoline and natural gas. Such levies would also have caused a drop in gross domestic product of between 0.21 per cent and 0.4 per cent.
“This gives us the best bang for the buck,” one official said Monday of the cap-and-trade system that discourages carbon emissions through a complicated system of credits.
Businesses will have greenhouse gas limits, or caps, and those coming in under theirs can sell or trade credits.
This is to create an economic incentive to pollute less.
An industry’s overall cap will gradually be lowered in order to reduce pollution, which should promote the use of greener energy sources such as wind and solar power in homes and electric cars on roads.
Ontario expects to cut 18.7 megatonnes of greenhouse gas emissions by 2020. (In perspective, the province’s output was 170.2 megatonnes in 2014, lower than the 210.6 megatonnes spewed out in 2005, the reduction thanks mostly to ending coal-fired electricity generation.)
But of that 18.7 megatonnes, EnviroEconomics notes that only 3.8 megatonnes will actually be in Ontario — the rest could be slashed in Quebec and California, though this province would still get credit for the reduction in the three-jurisdiction cap-and-trade program.
The report also found Ontario’s exports would drop by 0.51 per cent in 2020 due to the carbon-pricing, although a straight carbon tax would have triggered a drop of anywhere between 2.5 per cent and 8.4 per cent.
As well, it points out more than 50 different “carbon-intensive” industries, including auto manufacturing, cement, chemicals, forestry, iron and steel, and petroleum, face some risk under the forthcoming regime.
Environment Minister Glen Murray insisted Monday that that’s why the government will have “transitional assistance” to help businesses adjust to the new reality of polluting less.
“There’s nine large emitting industry associations — if you look at the 158 large emitting sites in Ontario — that are going to be reducing, whether it’s a cement factory or steel plant, or refinery,” said Murray.
“We’re working closely with them. We’re actually seeing plans come forward by many industry sectors about how they want to manage it,” he said. “(We) will have several billion dollars over the next four to five years to invest in those plans to help them make that transformation, as they are in Quebec, and as they are in California.”
“Remember, our industries support cap-and-trade over (a carbon) tax . . . because they realize that a market-mechanism system is better than a politically defined system.”
NDP Leader Andrea Horwath said she is worried about the consequences of what Murray is proposing.
“We’re concerned about jobs, we’re concerned about everyday people and their ability to afford these kinds of changes,” said Horwath, urging the government to reveal its full plan as soon as possible.
“Some of these changes seem quite substantial.”
Progressive Conservative MPP John Yakabuski (Renfrew-Nipissing-Pembroke) expressed alarm that the Liberal plan could “cripple the economy” and spell “disaster” for Ontario families.
“It just doesn’t make any sense. It’s wonderful to be as green as possible, but it has to be plausible. It has to be realistic,” said Yakabuski.
With files from Rob Ferguson