Ontario’s climate plan nothing more than cash grab

Fraser Institute report released this week argues three conditions are necessary for government carbon pricing schemes to lower industrial greenhouse gas emissions linked to climate change efficiently. And that Ontario Premier Kathleen Wynne’s cap and trade plan doesn’t have any of them.

Kenneth Green, author of the report, Poor Implementation Undermines Carbon Tax Efficiency in Canada, contends Ontario’s carbon pricing plan — along with Alberta’s, Quebec’s and B.C.’s — is really just a government cash grab masquerading as an environmental program. His study says the three conditions crucial to carbon pricing ’s success are: It must displace other government regulations, not be imposed in addition to them.

It must be revenue neutral, returning to the public all of the new money the government takes in from higher prices on most goods and services, in the form of lower personal and corporate income taxes.

Carbon pricing revenues must not be used by the government to distort energy markets with public subsidies to alternative forms of energy production and efficiency.

Green says the problem when governments do these things — and Wynne’s cap and trade plan does all three — is that it undermines the entire purpose of carbon pricing. That is, to put a price on industrial greenhouse gas emissions linked to man made climate change, and then let the market determine the most efficient ways of lowering them.

By contrast, Ontario’s plan increases government regulation rather than streamlines it.

It will take almost $8 billion out of the economy in its first four years of operation alone, because it isn’t revenue neutral. Finally, the government intends to continue arbitrarily picking economic winners and losers under carbon pricing, through huge public subsidies of everything from electric cars to alternative energy sources.

“In effect, having claimed credit for implementing an emission pricing system,” the Fraser study concludes, “Ontario has simultaneously declared it has no faith in the pricing system’s ability to allocate abatement activity, so government planners will do it instead. In its totality, Ontario’s climate plan and its implementation of carbon pricing bears almost no resemblance to the textbook ideal.”

In other words, while Wynne’s carbon pricing plan is good at creating “revenue streams for pet (government) projects” and transferring wealth, it’s lousy at lowering emissions, its ostensible purpose.