Ontario’s New Climate Change Plan

The new Ontario government recently released their plan to tackle carbon emissions and climate change.  This comes after scrapping the previous government’s relatively new cap-and-trade scheme that was set up in collaboration with Quebec and California.  Below I’ll give a detailed analysis of various parts of the plan, but here is my high level overview.  There are some promising bits and pieces (without knowing a lot of details yet), but it is relatively unambitious and somewhat odd in its approach.  This new government has generally focused on reducing regulation and taxpayer-funded spending, but this plan implements additional regulations and uses tax money to subsidize industry.  This seems inconsistent.  If you want to see the plan and comment, here is the link.  Now for my detailed analysis…

I will refer to the full 54 page document issued in late November 2018, which can be accessed here.  The page numbers below refer to those pages in the document.

Targets:  (page 7).  Ontario sets a 30% reduction target (from 2005 levels) which is the same as the overall Canadian target under the Paris Agreement.  Ontario has already achieved a 22% reduction, mainly due to the shut down of coal-fired power plants some years ago, so going the extra 8% is not that difficult or ambitious.  Unfortunately, it is now clear that the Paris Agreement targets are insufficient to keep temperature rise to less than 2 degrees, so overall both the Ontario and Canada targets are rather lacking.  I won’t be surprised if there is a push to do more in the coming months and years.

Impact Assessment:  (page 19).  The plan calls for more study of climate change impacts to help with adaptation and mitigation.  There is some information on preventing basement flooding, which is certainly a good idea to implement given the more frequent intense rainstorms.  This is all good stuff, but I’m not sure how new it is.  Presumably people/cities have already been starting to do this?  It’s good that there is some recognition that extreme weather is already costing us more in insurance, as seen in the graph.  

Low Carbon Vehicles:  (page 23).  Basically adoption of electric vehicles.  The government cancelled incentives for this a few months ago, so it’s not clear what the plan actually is to support this.

Industry Performance Standards: (page 23).  Regulating large emitters of greenhouse gases is the basic idea.  OK in principle, but compared to “carbon pricing” this is a less efficient way forward and requires more government bureaucracy.  It will require a team of policy, technical and legal experts to consult with industry and develop regulations and proposed limits.  Taxpayers will likely have to pay for this, versus just imposing a price on carbon and letting industry figure out what the best way forward is.

Clean Fuels:  (page 23).  Substituting more ethanol into gasoline has minimal effects on carbon emissions.  Using renewable natural gas (biogas) is useful though.  How this will be achieved will be interesting to see, since few details are given.

Ontario Carbon Trust (page 24).  Basically spending up to $400 million of tax dollars to subsidize business to implement new technology and reduce emissions.  Again, OK in principle but requires another team of policy, technical and legal experts to solicit applications from business, assess the feasibility, make the awards, and do follow-up audits to ensure the money was properly spent and was effective.  Another significant bureaucracy with all of the cost overheads required to run it.  This is another reason why economists generally say that carbon pricing is more efficient, because you download all that analysis and decision-making to the individual businesses rather than trying to have the government do it.

Make Polluters Accountable (page 25).  Again, imposing regulations and limits on large carbon pollution emitters, with accountability and compliance mechanisms (more bureaucracy).  In principle this is OK, but with a focus on specific “large emitters” it kind of misses a significant point.  The transportation sector (including passenger cars and trucks) is one of the largest emitters of carbon dioxide in Canada, but this is millions of small emitters.  Focusing on a few “large emitters” may have a fairly minimal overall impact, for a large investment of government time and money.  Making polluters accountable should include all of us that burn fossil fuels in cars, etc.

Use Energy Wisely (page 31).  All good ideas, but these things have been going on since the “energy crisis” in the 1970s and beyond.  There is nothing in the plan that appears to help drive any of these ideas or changes beyond “encourage”, “consult”, “improve”, “collaborate” and various other wishy-washy policy words.  Again, carbon pricing helps to encourage energy efficiency by making it economically worthwhile to invest in more energy efficient appliances and vehicles.

Overall:  lots of the usual good sentiments, ideals and desires.  But not a lot of actual policies and (more importantly) economic drivers to push changes in the right direction.  Many other jurisdictions around the world are using cap-and-trade or carbon pricing (polluter pay) systems to good effect, with less government intervention and inefficient spending required.  The plan might work, but there are only 11 years left and not much margin for error.

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