QP Briefing. In first act as premier, Ford officially cancels cap and trade

By David Hains

In its first act as a new government, Doug Ford and the PCs have cancelled cap and trade in Ontario.

“I promised that the party with taxpayers’ dollars was over and that this would include scrapping the cap-and-trade carbon tax slush fund. Today we are keeping that promise,” said the premier in a statement.

“Cap-and-trade and carbon tax schemes are no more than government cash grabs that do nothing for the environment, while hitting people in the wallet in order to fund big government programs,” he added.

The end of cap and trade means the GreenON program that provided environmentally friendly subsidies to Ontarians is discontinued, although contracts that were already in the works will be fulfilled. The PCs additionally promoted the policy as a means to lower the price of gasoline, although the 4.3 cent-per-litre tax was a small portion of the overall policy.

The move to cancel cap and trade fulfills a signature campaign promise for Ford, who was sworn in on Friday and whose PC party won 76 of 124 seats in the June 7 election. The Tories were the only party to promise to cancel cap and trade, a form of carbon pricing where companies buy and sell credits for emissions over a certain level of pollution. But while the PCs touted following through on their campaign promise, it could bring a host of new problems in the form of legal challenges, missing environmental targets and high costs.

In the absence of cap and trade, the federal government has told the provinces that it will implement a carbon tax, which Ford also opposes. He has vowed to fight this in court, and has said he would allocate $30 million in legal costs. But most legal experts have said the challenge will likely fail. If the carbon tax is implemented without Ontario’s co-operation, Ottawa has indicated the province will not have a say in how the tax revenue gets spent. And a carbon tax could cost more than cap and trade; the People’s Guarantee, which was the PC platform under Patrick Brown and supported a carbon tax, projected revenue in 2021-22 to reach $2.4-billion, an increase from the $1.9-billion under cap and trade in 2017.

Keith Stewart of Greenpeace Canada warns that Ontario could face additional court challenges from companies that bought $2.8-billion worth of now-worthless carbon credits for the next two-and-a-half years. “The rational thing to do would be to let the existing credits wind down until 2020,” when the compliance period for cap and trade is over, he told QP Briefing. Instead, the PC decision to immediately unwind the program rather than giving the 18 months’ notice that the agreement calls for means “they’re likely going to be seeing some lawsuits.” Stewart added that the way the Tories went about the issue shows they were more interested in a “cheap political stunt” than sound environmental policy.

The PCs did not respond to questions from QP Briefing about a possible lawsuit from companies that spent billions on credits, including whether they sought legal advice before making their decision, and what that legal advice was.

While the Tories cited the auditor general’s 2016 report on cap and trade in the statement that announced the cancellation of the program, events have mostly outstripped Bonnie Lysyk‘s original concerns. Lysyk expressed skepticism that the program would meet its greenhouse gas reduction or auction targets. But the 2018 report from the environmental commissioner stated that the province was “on track” and would probably meet 2020 targets – although 2030 would be a challenge – and that auctions floors were regularly exceeded.

The NDP called on the Financial Accountability Office last week to evaluate the cost of cancelling cap and trade. A total price tag has not been put on the initiative.

In a statement, Green Party Leader Mike Schreiner said the PC plan to cancel cap and trade “without announcing an alternative is reckless and irresponsible.”

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