Ontario Liberals promise cap and trade proceeds will go to greenhouse gas emission reduction

Insurance rates have increased due to climate change, and the money the Ontario government will raise from an emissions allowance auction will be spent on efforts to reduce greenhouse gas emission, Finance Minister Charles Sousa suggested Thursday.

In its budget document for 2016-17, released Thursday, the Ontario government notes that climate change has “increased insurance rates,” and that “worldwide, 14 of the last 15 years have been the warmest on record.”

Examples of severe weather cited in the province’s budget document included a storm July 8, 2013 which resulted in Canada’s third-most expensive natural disaster, measured by insured losses.

“The very high rate of rainfall resulted in the flooding of rivers, creeks, ravines, and low lying areas,” stated a City of Toronto staff report published in 2013. “Arterial roads and underpasses were flooded, public transit services were disrupted including the GO Train line in the Don Valley, stranding 1,400 passengers for more than seven hours.”

Then in December, 2013, an ice storm resulted in $200 million in property damage, the Ontario government stated Thursday in its budget document.

“Climate change is not a distant threat,” the government stated in its budget document released Thursday. “It is already costing the people of Ontario.”

The province will start its cap and trade program Jan. 1, 2017. That program would “create limited tradable emissions allowances” for a given period.

Proceeds from an auction are anticipated at $478 million in 2016-17 and $1.8 billion to $1.9 billion a year starting in 2017-18.

“We are taking action on climate change and investing all the proceeds from cap and trade into green projects, because we have the responsibility of being good stewards of the environment and our economy,” Sousa said during a press conference near Queen’s Park Thursday before he presented the budget to the legislature. “All of this is about cleaner air and providing for a better environment for our children and grandchildren. It’s also about competing in the low carbon economy, which is what’s happening all around the world.”

The cap and trade program would cover industries, institutions, electricity generators and suppliers and distributors of heating fuels that emit 25,000 tonnes or more of greenhouse gas emissions per year. The program will also cover suppliers and distributors of transportation fuel who distribute 200 litres or more of fuel per year. For consumers, the government suggests it anticipates the cap and trade program will raise gas prices by about 4.3 cents per litre and residential home heating bills for natural gas customers would rise an average of $5 per month

Cap and trade legislation – which has yet to be passed into law – would create dedicated “proceeds to the reduction of GHG emissions and ensure public reporting on that commitment,” the province stated in the budget document, which lists “potential investments” from the money raised from cap and trade.

Investments could include geothermal products, low-carbon energy and infrastructure to support zero-emission and plug-in hybrid vehicles.

But opposition leaders suggest the ruling Liberals are not being specific enough on where the proceeds will be spent.

“We know that the government is saying that any revenues they generate are going to go to greenhouse gas reductions, so we were hoping that we would see some direct commitments around the revenue streams going to greenhouse gas emissions efforts,” said Andrea Horwath, leader of the Ontario New Democratic Party, during a press conference Thursday. “However we know that the revenues that are going to come in are going to be part of the consolidate revenue fund. That sends up alarm bells for us, quite frankly.”

Patrick Brown, leader of the Progressive Conservative party, echoed Horvath’s concerns.

“This is going to be a significant revenue grab by the government, and I think the majority in this province will be very disappointed there isn’t oversight, if there isn’t dedicated funds,” Brown said during a press conference. “The notion that it could be used for whatever pet project that they choose, regardless of whether it’s going to have benefits of reducing greenhouse gas emissions, should be worrisome.”

Brown suggested something needs to be done about climate change.

“I’m not saying that nothing should be done,” Brown said. “I’m very clear that I’m not a climate skeptic. I believe this is a challenge that our generation must confront.”

But Sousa countered that the money raised will be “dedicated” to GHG reduction.

“We are very clear that all proceeds that are received from cap and trade are fully reinvested in those programs that are identified.”

Climate change, if not addressed, “will create significant economic damage, as well as negative environmental impacts,” the province stated in its budget document.

Effects in infrastructure include “roads that buckle in severe heat, water mains that overflow in severe rain, hydro lines coated with heavy ice that snap and leave thousands of Ontario families and businesses without power.”

More coverage of the 2016-17 Ontario budget

Ontario Retirement Pension Plan deductions start for large employers in 2018

Ontario government to mandate disclosure of insurance claims history on used vehicles