Greenhouse gas plan will cost you

Ontario premier admits system will drive up prices at the pump

Ontario consumers will likely pay more for home heating and fuel, including an extra 2.5 to 3 cents a litre for gasoline, under the province’s plan to cut greenhouse gas emissions.

But it’s a small price to pay to combat climate change, supporters say.

Premier Kathleen Wynne announced Monday the province would introduce a “cap-and-trade” system of carbon pricing on greenhouse gas emitters.

Few of the details have been worked out. But one thing seems certain: The added costs to businesses will be passed down to consumers.

“That’s the whole point. That’s how you get people to shift toward consuming things that have a lower carbon intensity, from the vehicle we drive to the way we heat our homes,” said Glen Hodgson, chief economist with the Conference Board of Canada, an Ottawa think tank supported by business leaders.

The province would be the third jurisdiction in North America, after California and Quebec, to move toward a cap-and-trade system.

Unlike a carbon tax, which puts a price on every tonne of greenhouse gas emissions, cap-and-trade limits emissions but allows companies to buy permits to meet their needs and also trade the permits.

The system will “protect the air we breathe, the water we drink and the health of our children and grandchildren,” Wynne told a press conference.

She also acknowledged it could lead to higher prices at the gasoline pumps.

Ontario’s announcement is “a big step forward,” said Chris Ragan, chair of Canada’s Ecofiscal Commission and an associate professor of economics at McGill University. The commission has recommended provinces move forward with their own carbon pricing plans, rather than wait for the federal government.

The biggest greenhouse gas emitters in Ontario — by sector — are transportation, industry and buildings, according to a report released by the province in February.

The impact on industry will depend on how the program is designed, several business organizations said.

It’s unclear how much the program will cost because it hasn’t yet been designed. In Quebec, carbon permits currently trade for just over $12 a tonne.

“Products that are particularly intensive in their carbon emissions are going to go up (in price). Other products aren’t going to go up at all in price,” Ragan said.

The province said Monday it would reinvest the money in projects that reduce greenhouse gas pollution and help businesses remain competitive. That could include helping families buy more energy efficient appliances, building more public transit and helping factories reduce their emissions.

California returns some revenues to citizens in the form of energy credits.

Quebec places the revenue into a Green Fund for new technologies and public transit.