Kathy HeringSenior Policy Analyst
Ministry of the Environment
Climate Change and Environmental Policy Division
Air Policy and Climate Change Branch
77 Wellesley Street West
Phone: (416) 326-8092
Dear Kathy Hering
Ontario must take concrete action now to reduce the risks and costs associated with the climate crisis. I appreciate the Ontario government’s efforts to release a climate change discussion paper and seek public input on solutions to reduce greenhouse gas (GHG) pollution.
Immediate, aggressive and concrete actions are needed to reduce carbon pollution if Ontario is to meet its 2020 climate obligations of being 15 per cent below 1990 emission levels. There is also a need for interim targets and regular 5 year reassessments between now and 2050 to ensure the province is on target to meet our 80 per cent below 1990 emission reduction obligations.
The province should develop more aggressive GHG reduction targets in light of the IPCC’s most recent report. To meet the IPCC’s targets, Ontario needs to reduce its year-over-year per capita GHG emissions by approximately 6% each and every year between 2015 and 2050. Every effective strategy for emission reduction will need to be employed.
Putting a price on carbon pollution is the most effective of the many tools available to reduce GHG emissions. Whatever method of carbon pricing Ontario chooses, the following principles should be employed:
- Price carbon pollution at source of extraction or importation;
- Broad coverage of all sectors and sources of GHG pollution;
- Price protection for low income individuals and households;
- Simple, transparent pricing system for rapid implementation;
- Revenue neutrality and/or a dedicated fund for revenue to be used for climate mitigation.
I strongly encourage the province to adopt the most effective carbon pricing system—carbon fee and dividend.
A revenue neutral carbon fee and dividend is a progressive carbon levy. It puts a price on carbon pollution by charging a fee on carbon-based fuels, imposed as it comes out of the ground or when it is imported, and distributes the revenue directly to people through a dividend cheque. It rewards carbon-conscious consumers and protects people living on lower incomes as we transition away from a high carbon economy.
Carbon fee and dividend is the most politically workable carbon pricing mechanism. I do not want carbon pricing to be delayed due to concerns that the fee is a “tax grab” or that the “government can’t be trusted with spending the revenue.” Nor do I want delays in carbon pricing while carbon trading systems are being negotiated and designed.
The advantages of a carbon fee and dividend policy are:
- It’s effective: Putting a set price on carbon pollution is a simple way to create market incentives to reduce GHG emissions. A set price has reduced BC’s fossil fuel use by 16%, while encouraging economic growth and job creation in the clean economy. The EU cap and trade system has experienced mixed results.
- It’s transparent: Money collected from a carbon fee is distributed directly to individuals and households as a carbon dividend cheque. Money transfers are less transparent with the trading of pollution permits and carbon offsets in a cap and trade system.
- It’s simple: The more carbon you use, the more fee you pay; the less carbon you consume, the more financial benefits you receive. Cap and trade requires complex pollution permit auctions and trading systems.
- It’s predictable: A set price on carbon pollution with scheduled price increases provides businesses and consumers with a stable and predictable price for planning and purchasing decisions. Fluctuating prices in a cap and trade system make it difficult for businesses and people to plan.
- It supports innovation: Any price on carbon will create market incentives for businesses to innovate and create jobs in the clean economy. However, a fee and dividend system provides people with the the money to purchase low carbon and energy saving goods and services from innovative companies without the government picking winners and losers.
- It’s easy and less expensive to administer: Existing structures are in place to collect the fee and return the dividend to the people of Ontario. A cap and trade policy will require new systems, negotiations with other jurisdictions and more bureaucrats to administer. We can’t afford to delay action on the climate crisis.
- It’s fair: Estimates are that ⅔ of households–usually middle and lower income households who consume less–would break even or receive more money in dividends than they would pay in fees. In any carbon pricing system, consumers ultimately pay for carbon pollution in the cost of carbon fuels and goods produced with carbon. A dividend helps people manage costs and purchase energy saving products and services.
- It rewards people: The dividend cheque provides people with money to reduce their carbon footprint by purchasing low carbon and energy saving products and services. A cap and trade system rewards traders, lawyers and accountants who are needed to run the auction and trading systems.
- It has a reinforcing support mechanism: The higher the carbon fee, the higher the carbon cheque. As people shift to low carbon and energy efficient goods and services, they will want a higher, more effective carbon fee, because they will receive more money in their pocketbook.
In addition to pricing carbon pollution, I encourage the government to take action in other areas:
- Engage and learn from First Nation, Métis and Inuit communities in how to provide good stewardship for present and future generations and to sustainably manage natural resources, especially water. It is especially important to settle land claims so that First Nation, Métis and Inuit people have control of their land and resources.
- Require analysis of the effects of upstream and downstream GHG emissions on the province’s GHG reduction targets of all new infrastructure projects (e.g., pipelines, highways, subdivisions).
- Aggressively reduce carbon pollution in the transportation sector, which is the province’s largest source of GHG pollution. Provide capital investment in public transit to fully fund the Big Move and restore 50% provincial operating funds for public transit. These efforts should be funded with revenues from programs that create incentives for people to choose transit such as commercial parking levies, congestion charges and road pricing. Provide incentives for people to purchase low-emission electric vehicles paid for with levies on high emission vehicles. Dedicate 2% of the transportation budget for walking and cycling infrastructure.
- Implement a provincial Green Building Strategy to reduce GHG pollution from Ontario’s homes and buildings while helping people and businesses to save money by saving energy. Issue a directive to the Ontario Energy Board instructing them to approve all cost-effective energy efficiency and conservation programs. Revive the popular and successful Home Energy Savings Program with incentives that include businesses and tenants. Funding for such a program can be secured with the $1 billion in annual savings from canceling the rebuild of the Darlington Nuclear Station.
- Phase in requirements for new developments and buildings to be net zero communities and buildings. Provide financial support for community energy plans and projects.
- Remove caps for renewable energy from Ontario’s Long-term Energy Plan. Reduce regulatory and bureaucratic barriers to the easy installation of individual and community green energy projects. Require a minimum 20% local ownership of renewable energy projects.
- Pay farmers for producing environmental goods and services, especially source water protection and carbon storage, that benefit society as a whole. Remove barriers and provide support for local sustainable food producers.
- Implement legislation to permanently protect prime farmland and source water regions.
- Ban organic waste from landfill and implement individual extended producer responsibility legislation. Develop a zero waste plan for Ontario.
- Provide investment tax credits for clean technology companies to grow and create low carbon jobs. Provide incentives for science, technology, research and development in the clean technology sector.
I appreciate the opportunity to contribute to Ontario’s Climate Change Discussion Paper and the government’s consideration of my recommendations.