How Ontario's Proposed Carbon Price Is Not A Carbon Tax (Probably, Maybe)

TORONTO — Ontario ministers continued their crusade against carbon taxes last week even as their government posted details of its own pollution pricing plan.

“We oppose a carbon tax in any form, absolutely,” Finance Minister Vic Fedeli said at a press conference on Wednesday. “It will hurt our businesses and it will hurt families.”

The day before, Ontario’s ministry of environment proposed a system that will set standards for industrial emissions and charge companies that don’t comply.

“It is absolutely pricing carbon,” environmental economist Dave Sawyer told HuffPost Canada in an interview. “[Companies] will be paying the government money for being out of compliance. It could be called a tax.”

Ontario says the system is “an alternative” to part of the federal government’s carbon tax, which Premier Doug Ford has said will destroy the economy.

Watch the premier rail against carbon taxes.

The federal government is applying its policy in jurisdictions that don’t have their own. It includes a charge on all fossil fuels paid by producers or distributors, and a separate system for industrial facilities. Ontario is only proposing a system for the latter.

The province was going to be exempt from the federal plan, until Ford entered the premier’s office and eliminated the previous government’s cap-and-trade program.

Fewer emissions covered under new plan

His government’s proposal looks remarkably similar to certain parts of the cap-and-trade policy they ripped up, Sawyer said. Except there’s one big difference: it will only apply to a small fraction of the province’s emissions.

“There’s, say, 25 to 30 megatonnes that are covered by this program and Ontario’s emissions are upwards of 170 megatonnes,” he said.

“So, although this program looks like what existed before, the overall system before covered way more emissions, which was cars and vehicles and buildings. That’s the major difference.”

Cap and trade capped the amount of pollution that companies in Ontario could emit and gave them trade allowances. So a company that didn’t need to hit its cap could sell allowances to a company that had gone over, giving a financial reward to those that reduced emissions the most.

Ontario’s proposed policy allows companies to bank leftover emissions allowances or trade them with other facilities.

“For large emitters, we’re back to the place where we were before,” Sawyer said.

Businesses lost out after cap and trade was cancelled

Ford’s government essentially replaced cap and trade with one part of cap and trade, wasting money in the process, Sawyer said.

Businesses bought billions of dollars of allowances for cap and trade, which became worthless. And that’s to say nothing of the government’s costs, he added.

“Those are not inconsequential. The design of that Ontario cap-and-trade system took a lot of person-power for a long time.”

HuffPost asked Emily Hogeveen, spokeswoman for Ontario Environment Minister Rod Phillips, why the government considers a system that charges for carbon emissions to be different from a “carbon tax.”.

She replied via email by quoting Phillips, saying only that the system will reduce emissions from industry while addressing the needs of businesses: “This is an important step to reducing our emissions, without unfairly burdening families with a carbon tax.”

The plan doesn’t cover a big enough portion of Ontario’s emissions, Sawyer said.

“The big problem with the current Ontario plan is it doesn’t cover adequately the rest of emissions,” he said. “I don’t know how they’re going to get significant emissions out of the rest of the economy. This is a partial solution.”

CORRECTION: A previous version of this story said that Dave Sawyer assessed Ontario’s emissions performance standards plan as weak. Sawyer clarified that the policy could be strong, but its coverage of Ontario’s emissions seems inadequate to achieve the reductions the government has set out to achieve.

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