As of January 1st, 2017, the Ontario Climate Change Action Plan is officially in effect. Just what we were waiting for: a comprehensive action plan that’s going to reduce greenhouse gas emissions and reroute our economy away from environmentally harmful practices towards innovation and sustainable growth. Just in the nick of time, too! In December 2016, Prime Minister Trudeau mandated the provinces establish a price on greenhouse gas emissions by 2018 through the Pan Canadian Framework on Climate Change. So, Ontario is actually one-step ahead.
Ontario’s Climate Change Action Plan has eight action areas that cover an expansive range of programs. Transportation is Ontario’s largest emitting sector, contributing to 35% of Ontario’s greenhouse gas emissions. Industry follows closely behind at 28% of emissions and buildings and homes contribute 18%. In the plan, Ontario has recognized the importance of collaborating with First Nations to provide mutually beneficial results. The province has also taken the initiative to update and upgrade its own government buildings and operations. It appears to be the comprehensive, transformative change that experts are calling for: an innovative, sustainable Ontario by 2050. Great!
However, as it seems to go with most shiny, new policies, once you dive into the specifics, a few concerns rise to the surface. I will address three concerns here. First, like the Auditor General of Ontario, I find the plan vague. Although the vision for Ontario seems clear, the techniques for implementation are not. For example, the planned “action” for industry (our second largest source of emissions) is to assist business in transitioning to low-carbon technology and retrofitting agricultural facilities, for which the province is willing to dish out $50 to $115 million dollars. But, there are no details on how or to whom these funds will be distributed. Two of the other major action areas, land-use planning and transportation, will rely heavily on coordination with municipal priorities, which vary greatly from region to region; however, implementation and compliance with municipal partners has not been addressed in the plan.
Second, the cap and trade system will be the main tool for reducing emissions, and the main source of revenue for investment, but revenue is not guaranteed. Sales from emission permit auctions are projected to raise $1.8 to $1.9 billion dollars annually, which will then be funnelled back into the province through investment in green projects. But, what if the permits are unable to raise the money? In their two most recent auctions, Quebec and California have only sold 11% and 35% of permits. This is the market that Ontario will be joining in 2018.
Third, we should be concerned about the ability of the cap and trade mechanism to reduce emissions generally. Experience from the European Union’s Emissions Trading System has shown that low prices and liberal permit distribution led to an over-saturated, ineffective market. Ontario may feel compelled to ease businesses into this new system, but too much forgiveness from the outset will be detrimental to the future success of the pricing mechanism. Cap and trade expert, Duncan Rotherham, states that current market trends suggest Ontario will only reach half its target of a 37% reduction by 2030. With a minimum price of under $13/tonne, the price signals are just not high enough to encourage businesses to reduce their emissions.
Together, these concerns leave me with a number of questions. How will we monitor the flow of money without a strategic implementation plan? If money cannot be raised through permit sales, which “action areas” will be cut first? Will they cut subsidies for charging stations, cycling networks, building refurbishments, or training for sustainable jobs? If the cap and trade system does not work, how will the government get to the sustainable 2050 Ontario they have promised? Ontario must acknowledge the challenges of a market-driven price mechanism and be prepared to explore other options if the cap and trade system does sufficiently reduce emissions. Don’t get me wrong, this is a huge step in the right direction, and the cap and trade system has the potential to be really, really great. But, it is a complex initiative and I hope the optimism shining through the plan isn’t actually overlooking the challenges ahead.
About the author: Sadie Harrison is first year student at Carleton University in the Masters of Public Policy and Administration program. She recently received the Public Choice Award for the Blueprint 2020 National Student Paper Competition.