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Insurance costs ‘will only increase’ without ‘immediate action’ on greenhouse gas reduction: Ontario Liberals


March 9, 2016   by Canadian Underwriter


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Ontario’s ruling Liberals suggest that immediate action is needed on greenhouse gas reduction due to extreme weather caused by climate change, but opposition politicians are characterizing the proposed cap-and-trade system as a “slush fund.”

Bill 172, the Climate Change Mitigation and Low-carbon Economy Act, 2016, is before the Ontario legislature. Without immediate action, Ontarians can expect higher insurance costs, a Liberal MPP warns

Bill 172, Climate Change Mitigation and Low-carbon Economy Act, 2016, is before the Ontario legislature for second reading. Debate on the bill was adjourned Tuesday.

If passed into law, Ontario’s Minister of the Environment and Climate Change would be “authorized to create emission allowances and distribute them to registered participants for valuable consideration,” the ruling Liberals state in an explanatory note to the bill.

Participants would be “required to submit emission allowances and credits to the Minister periodically in connection with greenhouse gas emissions.” They would also able to purchase, sell or trade allowances.

In its budget document for 2016-17 — released Feb. 25 — the Liberals said they anticipate proceeds from an emissions allowance auction would be $478 million in the fiscal year ending March 31, 2017, and $1.8 billion to $1.9 billion a year starting in 2017-18. It is estimated that as a result, motorists will pay about 4.3 cents more per litre of gas.

“The revenue generated would go to a transparent fund that sets up nine different schedules for the use of the fund,” Marie-France Lalonde, Liberal MPP for Ottawa-Orleans, told the legislature Monday.

Bill 172 stipulates that some expenditures could include:

•Support for increasing consumer demand for zero emission and plug-in hybrid vehicles;

•Carbon capture, sequestration and storage;

•Public transit vehicles and infrastructure that reduce greenhouse gas emissions;

•Geothermal solutions, insulation, and other technologies that will reduce greenhouse gas emissions from buildings and neighbourhoods;

•The production or installation of renewable, low-carbon, carbon-free and net zero alternative energy;

However, members of both the Progressive Conservative and New Democratic parties expressed concern about a provision that “costs relating to initiatives that are reasonably likely to reduce, or support the reduction of, greenhouse gas may be paid out of the Consolidated Revenue Fund in an amount not exceeding the balance” of the greenhouse gas reduction account.

“For the government to say, ‘Oh, no, don’t worry, folks; there are regulations to stop this money from leaking anywhere else” – or from slushing anywhere else – why should people buy it?” said John Vanthof, NDP MPP for Timiskaming-Cochrane, in the legislature Wednesday. “We don’t. You want to make this transparent? Make it truly transparent: dollars in, dollars out — a separate account.”

The Progressive Conservatives “agree that action needs to be taken on greenhouse gases,” said Jeff Yurek, PC MPP for Elgin-Middlesex-London. “However, simply to create a fund to go after taxpayers — a slush fund — is the wrong way to go about it.”

But Glen Murray, the Minister of Environment and Climate Change, countered that the government has a separate account for the greenhouse gas reduction funds and suggested expenditures from that fund would be reviewed by the Auditor General.

“The money comes in; the money goes out,” Murray told the legislature. “We have also set a very high standard in the legislation in the action plans. We not only have to show where the dollars are going; we have to demonstrate what the estimated greenhouse gas reductions will be.”

Lalonde claimed that “damages from abnormal weather events-events caused by climate change” have cost Ontario “close to $1 billion in the past five years alone.” She cited as examples the tornado that hit Goderich in 2011 and the thunderstorms that hit the western Toronto area July 8, 2013.

“We have already seen an increase in extreme weather incidents, which have devastating impacts for individuals and our economy as a whole,” Sophie Kiwala, Liberal MPP for Kingston and the Islands, said Tuesday. “Without immediate action, we can expect that insurance and repair costs will only increase with the degradation of our environment. We need a long-term framework for climate action, and Bill 172 will do just that.”

But Vanthof said climate change is more about long-term trends.

“A lot of people talk about climate change like it’s static, like when I hear people who say, ‘We’ve had a severe thunderstorm,’ or ‘We’ve had floods,’ and that’s an example of climate change. It’s not,” Vanthof said. “For climate change, we have to look at long-term trends, but to use every individual climatic event as an example of climate change, I think, is giving a false backdrop to the issue.”

In early 2013, SENES Consultants Ltd. released a paper commissioned by the City of Toronto environment office.

The paper — titled Toronto’s Future Weather and Climate Driver Study: Outcomes Report — included information on weather in 2000-09 and projected weather patterns from 2040 through 2049. SENES projected that by 2040-49, the maximum amount of rainfall in summer storms per hour would double. The report suggested the maximum amount of precipitation in one day could be expected to increase, from 66 mm in the decade from 2000 to 2009, to 166 mm in the 2040 to 2049 time frame.

The average number of days per year with a temperature greater than 30 degrees Celsius is expected to increase from 20 (in 2000 to 2009) to 66 during the 10-year period starting in 2040, SENES forecast in the report.

Although fewer storms will product more than 25 mm per day of precipitation in 2040 to 2049 than in 2000 to 2009, “a small number of those ‘heavy storms’ will produce ‘very intense’ storms and produce much greater amounts of rainfall in short periods than previously seen with clear impacts on city infrastructure (culverts and drainage management) and an increased potential for flooding,” SENES stated.

The paper was commissioned in the wake of a storm Aug. 19, 2005, which caused about $500 million in insured losses. Effects included the collapse of the Finch Avenue bridge over Black Creek, about a kilometre southwest of York University.

That SENES paper was released before the July 8, 2013 storm. That day, 126 millimetres of rain fell at Toronto-Pearson International Airport, while the normal rainfall for the entire month of July is less than 75 mm. The incident ranked third (with more than $900 million in insured losses) on the list of the most expensive natural disasters in Canada.


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