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
To whom it may concern:
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. I strongly encourage the government to utilize climate mitigation tools that can be implemented immediately in order to meet our 2020 obligations.
There is also a need for the government to establish more aggressive 2050 GHG reduction targets in light of the IPCC’s (Intergovernmental Panel on Climate Change) most recent report. Ontario and other developed countries/jurisdictions will need to establish a target of around 90% below 1990 GHG emissions as compared to the current 80% target. In order to achieve this, Ontario will need to reduce GHG pollution by around 6% per year over the next 35 years.
Since prudent energy infrastructure decisions require long-term capital investment, public policy must provide predictable market signals now. There is a critical need for interim targets and regular 5 year reassessments between now and 2050 to ensure the province is on target to meet our 2050 climate obligations.
Pricing Carbon Pollution
Putting a price on carbon pollution is the most effective of the many tools available to reduce GHG pollution. 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 and adaptation.
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. It is the most politically workable carbon pricing mechanism.
The advantages of a carbon fee and dividend policy are:
- It’s effective: Putting a set and predictable 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.
- It’s simple: The more carbon you use, the more fees 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. It provides the predictability people and businesses need to invest in the low carbon economy. 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. The carbon dividend provides the foundation for a guaranteed annual income in Ontario.
- 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 and is difficult to cut or kill the carbon fee once dividend cheques are delivered: 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. Having a positive reinforcement mechanism will make it difficult for future governments to eliminate the carbon fee since it would cancel the carbon dividend.
Although the Green Party supports a carbon fee and dividend policy as the most effective, fair and politically feasible pricing system, we recognize that the province is likely pursuing a cap and trade pricing scheme. If the province decides to move forward with a cap and trade system, the GPO believes it is essential that Ontario learn from and correct shortcomings that other jurisdictions have experienced.
It is essential that rules be in place—such as a firm price floor and a price ceiling—to mitigate gaming of the cap and trade system. The GPO does not support the use of carbon offsets, as they have been abused in other systems. If the province does permit offsets, strict rules and regulations should be in place to prevent the worst forms of abuse. Any cap and trade system should apply broadly and not allow exemptions for certain sectors and industries.
It is essential that the cost of operating a cap and trade system be understood in advance. There are significant transaction costs to a cap and trade system that dissipate the benefits from reducing carbon emissions. Firms will incur additional compliance, monitoring and verification costs. The public sector will incur administrative costs that will affect revenue. These costs should be publicly understood prior to launching the program.
Since transportation is the largest source of GHG pollution in Ontario, it is essential that any pricing system cover GHG pollution from the transportation sector. It is difficult to design a cap and trade system that effectively covers the transportation sector. If the province adopts a cap and trade system, I recommend a hybrid model that would include a carbon fee and dividend for transportation emissions.
The province could of course avoid the aforementioned complications by adopting a carbon fee and dividend.
Using Less Energy More Efficiently
Using less energy more efficiently is essential to reducing carbon pollution, making our businesses more competitive, creating jobs and saving people money. Ontario uses energy less efficiently than most jurisdictions around the world—we use 27% more electricity per person than neighbouring New York State, for example. This wastes energy and money, increases pollution, and makes our businesses less competitive.
To meet our climate obligations, Ontario will need to de-carbonize our economy, which will require deep reductions in energy consumption and dramatic increases in energy efficiency. Our homes and business will have to be much more efficient than they are now. Car use will need to be reduced and replaced by walking, biking, transit, and car sharing.
There is no doubt our lifestyles will change. If properly designed and planned, this change will be for the better. We will be healthier, live in more efficient homes, enjoy shorter commutes, breath cleaner air and have stronger, more prosperous local economies.
The Ontario government can do more to help people increase energy efficiency and conservation.
- 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. Invest in intermodal transportation infrastructure to reduce truck traffic. If the government elects to implement a revenue-positive carbon price, I recommend that part of the revenue be used to fund public transit expansion and be returned to people as a tax credit for purchasing transit passes.
- Provide tax credits for affordable commuter benefits such as ride sharing and car pooling, flexible work and telecommuting, transit use and employer trip reduction programs. Mandate new insurance tools such as pay-as-you-drive insurance. Implement more HOV and HOT lanes.
- Electrify Ontario’s rail and transit systems. And reverse cutbacks to rural and remote transit such as Ontario Northland.
- 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. Revive the popular and successful Home Energy Savings Program with incentives that include small businesses and tenants. Funding for such a program can be secured with the $1 billion in annual savings from cancelling the rebuild of the Darlington Nuclear Station and replacing it with lower cost water power from Quebec. If the government elects to implement a revenue-positive carbon price, I recommend that part of the revenue be returned to people and businesses through tax credits for building retrofits.
- Issue a directive to the Ontario Energy Board instructing them to approve all cost-effective energy efficiency and conservation programs. It makes no sense for the OEB to arbitrarily cap energy conservation budgets when, for example, $1 invested in energy efficiency for large industrial customers yields $54 of cumulative energy bill savings.
- Develop an Ontario wide framework for a Property Assessed Clean Energy (PACE) financing program, as an innovative local government solution to help property owners finance energy efficiency and renewable energy improvements – such as solar thermal hot water and energy efficient boilers, upgraded insulation, new windows, solar installations, etc. In addition, create incentives for the banking sector to deliver “energy saving” mortgages and loans at preferential rates to finance energy saving retrofits.
- Create a market for conservation by implementing a FIT program for conservation. Ontario should begin to use smart meters as a tool to help people save money by saving energy. In addition, require mandatory energy efficiency labeling for all commercial and residential buildings so people and businesses have the information they need to make smart purchasing decisions. Energy efficiency and conservation is the least expensive way to reduce GHG pollution. Yet, in the absence of a market for conservation and with inadequate information in the market for buildings, consumers and businesses are reluctant to make long-term investments in conservation.
- Phase in requirements for new developments and buildings to be net zero communities and buildings. Immediately revise the Ontario Building Code to require a minimum EnerGuide Rating of 90 and to ensure that all new buildings are solar ready. Provide financial support for community energy plans and projects. Provide incentives for district energy systems and combined heat and power systems.
- Implement an energy efficiency and conservation education program to make it easier for people to obtain information on how to save energy and money. Include energy efficiency and conservation in the Ontario curriculum.
- Introduce new mandatory standards of energy efficiency for motor vehicles, appliances, electrical equipment and machines.
Land Use Planning and Infrastructure
To make combating the climate crisis affordable, Ontario must use land more efficiently, design more livable communities and make smart long-term infrastructure investments. The mounting costs of sprawl, for example, are unaffordable and unsustainable—congestion costs the GTHA economy over $6 billion. These costs will only increase as fossil fuels become more expensive. At the same time, the cost of renewable energy is dropping rapidly.
Scientists warn that approximately 80% of the world’s fossil fuel reserves are not burnable if we are to avoid catastrophic climate change. Economists estimate that between $20 and $30 trillion worth of fossil fuel assets could be stranded—that is, they will become essentially worthless. Ontario must make smart infrastructure and asset investments today in order to avoid significant financial losses tomorrow.
Adaptation to climate change will also require new ways of designing communities, better protection of food and water resources and more resilient infrastructure to handle more frequent extreme weather events.
Ontario must simultaneously make investments that mitigate and adapt to climate change.
- Integrate sustainability and climate change planning into all public institutions. Require that provincial and municipal growth plans contain a Climate Action Plan to reduce GHG pollution and adapt to climate change. Require all Ontario government ministries, agencies and crown corporations to have a Climate Change Action Plan to reduce GHG pollution and adapt to climate change. Revise the Planning Act and Development Charges Act to reduce sprawl and ensure that growth pays for growth.
- Revise Growth Plans to ensure that municipalities balance population growth with employment growth. The goal for Ontario communities should be places where people live, work, play and invest locally in walkable, cycling neighourhoods and in towns linked by transit. Abolish or significantly overhaul the Ontario Municipal Board.
- 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).
- Remove caps for renewable energy from Ontario’s Long-term Energy Plan. Immediately increase water power imports from Quebec and explore east-west grid connections to import water power from Manitoba and Quebec. Reduce regulatory and bureaucratic barriers to the easy and affordable installation of individual and community renewable energy projects.
- Prioritize building of smart grid infrastructure to effectively and efficiently decentralize and democratize Ontario’s electricity grid. Invest in research, development and commercialization of energy storage.
- Phase out investment in fossil fuel dependent infrastructure. Prioritize construction of transit over new highways. Establish new minimum standards for infrastructure to withstand more frequent extreme weather events.
- Shift taxes from labour and productivity to resource use, pollution levies, and land value levies in order to create incentives to use land and resources more efficiently, reduce pollution and create disincentives for sprawl. Ontario must increase royalty rates and levies for aggregates, water taking, and mining.
- Implement legislation to permanently protect prime farmland and source water regions. Expand Ontario’s greenbelt and strengthen legislation that protects natural heritage and endangered species. Introduce a Great Lakes Protection Act to protect Ontario’s largest source of fresh water.
- Provide stronger protections for Ontario’s Boreal Forest, especially given the vital role of the region in serving as a carbon sink. Increase support and provide rewards for sustainable forestry practices.
- Change the definition of public infrastructure to incorporate green infrastructure. Green infrastructure provides financial, social and environmental benefits. It makes no sense that it is not included in the province’s definition of infrastructure.
Empower People and Businesses to Solve the Climate Crisis
Government should remove barriers to people, businesses and organizations taking action to solve the climate crisis. Markets are powerful tools in fostering creativity, innovation and prosperity. Government policy should be designed to support and reward market actors who do not externalize social and environmental costs.
The transition to a low carbon economy is a $6 trillion economic opportunity. If Canada can capture 1% of that market it will exceed jobs in auto manufacturing, oil and gas and other extractive industries. Clean energy jobs in Canada already exceed those in the oil sands.
Both our prosperity and our quality of life depend on transitioning to a low carbon economy. Ontario needs to invest in where the puck is going, not where it has been, if we are to be a leader creating clean economy jobs. Although government is not good at picking the winners and losers in the emerging clean economy, it can provide the necessary market rules and regulations for Ontario companies to thrive and create good jobs that benefit all Ontarians.
Ontario must implement policies that foster new businesses, job creation and prosperity in the clean economy. And the province can implement policies that empower people to create and implement climate solutions.
- Engage and learn from First Nation and Metis communities in how to sustainably manage natural resources, especially water, and settle land claims so that First Nations have control of local land and resources. Respect First Nations as partners in resource development, management and climate policy.
- Remove barriers that prevent people from investing in local sustainable businesses. Make it easier for investments in community power and clean economy projects to be in people’s RRSPs and TFSAs.
- Require at least 20% local ownership of renewable energy projects. Moving to a decentralized grid will democratize energy production, produce a more resilient grid and provide local economic benefits. The government must prioritize local ownership and benefits while encouraging this transition. Provide preferential access to the grid for community power projects and establish a loan guarantee program for public benefit, community-based renewable energy projects and expand programs that support Aboriginal green energy projects.
- Provide investment tax credits for clean technology companies. Provide incentives for science, technology, research and development in the cleantech sector. Ontario especially needs better policies to commercialize cleantech solutions.
- Implement individual extended producer responsibility legislation so that businesses are rewarded for reducing waste and developing solutions to reuse and recycle materials. Require life-cycle product stewardship of minerals, metals and materials that require businesses to have effective systems for taking back and recycling all recyclables in their products and disposal costs in their prices. Ban organic waste from landfill. Develop a zero waste plan for Ontario.
- Require public institutions to develop procurement guidelines that support purchasing local sustainable produced products. Promote fair trade agreements that recognize the importance of local purchasing programs for public institutions.
- Pay farmers for producing environmental goods and services, especially source water protection, carbon storage and habitat protection, that benefit society as a whole. Utilize the Alternative Land Use Services (ALUS) as a model for provincial implementation. Explore the possibility of developing a similar program for Ontario’s forestry industry.
- Introduce legislation that enable incorporation of B Corporations in Ontario. B Corporations allow businesses to include social and environmental sustainability as part of their corporate charter. It makes it easier for investors, consumers and the marketplace to support and reward businesses that incorporate social and environmental values into their operations.
- Establish a Social Innovation Fund to provide grants and loans to entrepreneurs starting businesses and organizations to reduce GHG pollution.
- Ensure that climate policies, especially carbon pricing, apply broadly across all sectors to ensure a level playing field.
Ontario is well positioned to be a leader in developing and delivering climate solutions that improve our economy, our environment and our quality of life. Present and future generations will thank us for and benefit from the climate actions we take today.
I appreciate the opportunity to contribute to Ontario’s Climate Change Discussion Paper and the government’s consideration of my recommendations.
Leader, Green Party of Ontario