QP Briefing. ON outlines $400M in climate change industry incentives

By David Hains

NOBLETON, ONT. — The new government announced its much-anticipated climate change plan on Thursday, vowing to meet Ontario’s Paris 2030 greenhouse gas reduction targets with a $500-million plan that provides $400-million in incentives for companies to cut emissions.

Against the backdrop of a conservation area near Vaughan Environment Minister Rod Phillips unveiled the 53-page plan as a “made-in-Ontario” solution to a vexing policy challenge.

“We will ensure Ontario achieves emissions reductions in line with Canada’s 2030 greenhouse gas reduction targets under the Paris Agreement,” the minister stated in the report, citing the “resourcefulness and creativity” that came from 8,000 public suggestions and meetings with various stakeholders. But he stressed that Ontario needs a plan that focuses on its unique needs. “One thing that has become particularly clear is the fact that no one solution fits all provinces, regions or communities,” he added.

The plan represents the first major initiative on the environmental file from the new government that has so far sought to undo landmark Liberal policies. Environment Commissioner of Ontario Dianne Saxe, whose mandate is being shuffled to the auditor-general in the mini-budget bill before the legislature, warned that environmental policies have been “gutted” by the new government. Opposition MPPs repeatedly howled that it was irresponsible for the PCs to scrap environmental policies without having new plans in place.

The climate change blueprint, entitled Preserving and Protecting our Environment for Future Generations: A Made-in-Ontario Environment Plan, features a signature “polluter-pay” program similar to one in place in Australia. The initiative, which is projected to cost $400 million over four years, fulfils a campaign promise and sees the government pay companies to reduce greenhouse gas emissions. The plan will be posted on the environmental registry later today.

The plan includes a $350-million Ontario Carbon Trust, a form of green bank that will provide incentives for companies to invest in clean technologies at a 4:1 or 3:1 ratio of private sector to government money. The design and mandate of the program still need to be determined, the plan noted, but it would have an independent board that would oversee the funding. The plan estimated that the Carbon Trust “should be able to … unlock over $1 billion of private capital” for environmentally-related investments. If the federal government funds the Ontario Carbon Trust to the tune of $420 million under the Pan-Canadian Framework, then the $1 billion of private investment could be doubled, the report added.

Another $50 million will be set aside for reverse auctions, which will also be overseen by the Ontario Carbon Trust. In this system, the government makes a certain amount of money available. Companies that meet eligibility requirements can then compete for the funding in a procurement process by submitting projections on how the money would reduce GHGs. Companies are thus incentivized to bid the lowest price at which they could deliver an environmentally-friendly project.

Phillips rejected the idea that the programs represented a form of corporate welfare. “No, it’s paying for reductions in greenhouse gas emissions, paying very efficiently for it because they’re the lowest cost prices,” he said in defence of the plan. “And it may be communities, it may be municipalities, it could be anyone that comes forward with those ideas.”

Answering a question from QP Briefing, Phillips said that although the government is spending four-fifths of its climate change funding on business incentives, it represents the best policy choice. “The reason we’re applying those resources to incent innovation, which is where the majority I think $350 of the $400 million goes, is because that’s where we see the opportunity.”

The two programs are effectively the PC government’s response to the cap-and-trade policy implemented by the Liberals, which was scrapped last month. The Ford government has railed against any form of carbon pricing, and has set aside $30 million to legally challenge the federal carbon backstop that will be imposed in 2019 and is set to be a major election issue.

The reverse auction policy takes the opposite approach compared to cap-and-trade. Where cap-and-trade created financial penalties for companies that exceeded a greenhouse gas threshold and in turn raised government revenue, reverse auctions pays companies to lower greenhouse gas emissions, which costs the government revenue.

Green Party Leader Mike Schreiner questioned whether reverse auctions will prove an effective policy, based on a previous case study. The country that has led the way in using the policy, Australia, has seen greenhouse gases rise, in part due to higher fuel exports. “The parts that they say are going to reduce emissions, haven’t worked in Australia so I don’t know why they would work in Ontario,” said the environmentally-minded MPP. He added that Australia also has a $2.5-billion plan to Ontario’s $500-million plan, even though Ontario has more than half of Australia’s population.

The plan also sets greenhouse gas emissions targets of 143.3 megatonnes per year by 2030, a 30 per cent reduction since 2005. The new target aligns Ontario with federal plans and allows for 26.9 per cent in more greenhouse gases over the previous Ontario Liberal plan. “One of the key ways we are defining our vision for climate action in Ontario is by setting an achievable greenhouse gas reduction target,” the plan stated.

Phillips acknowledged the lower targets compared to the previous Liberal government, but argued it was part of a realistic plan. “It is absolutely true that Kathleen (Wynne) targets were greater than our targets, it’s also true that she was going to be charging Ontarians $2 billion a year in a carbon tax, and it’s also true that many many observers thought that there was no way she was going to reach those targets.”

This weakening of greenhouse gas emissions targets was immediately blasted by government critics.

NDP energy and climate change critic Peter Tabuns, who said the PC plan was “scandalously thin” and would take Ontario into the “danger zone” of global warming. “If the world went ahead with those targets the world would heat up by about five degrees,” he warned. “The Paris Agreement is two degrees, best efforts to get down to one-and-a-half. So these targets are totally reckless and take us into this danger zone we don’t want to be in.” He added that the government’s ambition on the climate change file does not match the size of the problem. “The scale — it just does not match the scale at all of what has to happen. And even what we had in place was inadequate.”

Schreiner added that the plan made clear Ontario won’t meet its Paris Accord targets. “The only way we’re going to achieve the Paris targets, and the IPCC says this, is a 45 per cent reduction based on 2005 levels and being carbon neutral by 2050,” he said in a media scrum following the announcement. “So, their targets, like the federal government’s targets are not in line with Paris.”

While the climate plan touted significant greenhouse gas reductions that have occurred in Ontario since 2005, in large part due to phasing out coal, it also signalled that affordability for consumers will now become a higher priority. “Doing Canada’s heavy lifting on greenhouse gas emission reductions came at a cost that was too high for Ontario families and businesses,” the report states. “We will continue to do our share to address climate change and protect our environment. We will do so in a way that protects our economy and respects the people.”

Greenpeace Canada senior energy strategist Keith Stewart argued that relying on past accomplishments isn’t good enough, and the government needs to embrace the urgency needed to address climate change. “You have Conservatives saying ‘Oh the Liberals did great things on climate change, so we can stop,’ ” the environmentalist said. “Well that’s not what scientists are saying, that’s not what mother nature is telling us — when you look at the wildfires, when you look at the flooding, when you look at the devastation that’s happening, the rising seas — we need to act faster.”

Another $100 million will be available in the plan over four years for assorted environmental initiatives, such as cleaning waterways.

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