Following the trail of government efforts to mitigate so-called 'climate change' is like chasing a will-o-the-wisp. In both cases the pursuit of elusive greenhouse gases leads one to get lost in the swampy bog. Ontario is tying to reduce emissions with a myriad of tangled and conflicting programs and taxes: a federal carbon tax; the Western Climate Initiative (including a carbon trading program); and a low carbon fuel standard are only the top of the long list. These programs will do little to curb greenhouse gas emissions, do much to harm the economy - and all play on eco-guilt by appearing to be 'green'.

Despite having repeatedly opposed a carbon tax in Ontario, Premier McGuinty now supports a federal carbon tax as proposed by Mr. Dion's federal Liberals. Just prior to this year's provincial budget the premier stated unambiguously that there would be no carbon tax. Headlines in dailies screamed out in large font "McGuinty Says No to Carbon Tax". He said that while a carbon tax is well-suited for B.C.'s economy - and the direction it wants to go in - Ontario is pursuing a different strategy.

Research by the Canadian Taxpayers Federation reveals that, when fully implemented in four years, the federal Liberal's 'Green Shift' carbon tax would impose new taxes of $1.5 billion on Ontario's 111 power plants alone. This large impact doesn't even factor in the costs to the other 365,000 Ontario businesses. At the same time, the proposal provides a 1% tax cut for businesses. The tax cut will amount only to $811 million to be shared amongst all businesses, of which power plants are a mere fraction. Effectively, Mr. McGuinty has endorsed a plan that will impose a substantial cost increase to Ontario businesses; one that would be passed on to tax-weary consumers - all at a time when the economy is verging on recession.

Next up, the Western Climate Initiative (WCI). Ontario joins California, Arizona, New Mexico, Oregon, Utah, Montana, Washington, Manitoba, BC and Quebec in the pact. The WCI is a plan for members to work collaboratively to reduce greenhouse gas emissions and includes a carbon-trading program. Another carbon path into the swamp arises here. All signatories have different carbon emission reduction targets. Ontario targets, for example, 15% below 1990 levels by 2020. Some members have weaker targets. Washington and Montana target 1990 levels by 2020; BC targets 10% below 1990 levels by 2020 and Quebec has no targets set for 2020.

With differing targets - Ontario's being one of the toughest - 'carbon leakage' will occur. Carbon leakage occurs when carbon-emitting production shifts to jurisdictions with lower and weaker restrictions. This drives productivity towards such areas. In this case, it will drive productivity out of Ontario and into the arms of American states and Canadian provinces with lower emissions targets.

Final details of the WCI are scheduled for release September 22, 2008. However, early versions include some critical assumptions to reach emissions targets, including the California clean car standard which sets limits on tail-pipe emissions. Mr. McGuinty says he will opt out of this to diminish the impacts of the WCI on the auto industry. This raises the next dead end carbon path. If Ontario opts out of important elements, how will it meet its own targets Similarly, in a bizarre twist of logic, CO2 emissions from burning biomass will be exempt. For arbitrary reasons CO2 is not good when it comes from coal, gas or diesel; but is acceptable when it comes from biomass.

The final path into the carbon-reduction swamp comes from Ontario's efforts to deal with having opted out of tail-pipe emission standards; the creation of a low carbon fuel standard. Such a standard calls for 10% of all fuels to be renewable fuels. Given Mr. McGuinty has expressed concern over the impacts of renewable fuels one wonders how it will be possible to hit this target. Not to mention that the carbon emissions of renewables will need to be between 20% and 50% below that of gasoline, which they are not today.

It is clear that little is settled regarding the Ontario government's plans to fight an unnecessary war on carbon. Many announcements have been made chasing what appear to be pretty lights of greenhouse gas emission reductions. Yet, if one follows the lights, they reveal programs with massive cost hikes followed by contrary and contradictory plans. Chasing carbon emission reductions may lead Ontarians to the same end as following a will-o-the-wisp - neck deep in a swampy.

By: Kevin Gaudet
Posted: August 19, 2008
Topic: Ontario

Contact the regional director Kevin Gaudet for further information.

Type: Commentary

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