Paying a price for global warming and local politics

Ontario’s Liberal government will be judged, and held to account, on its cap and trade program.

Thestar.com
June 9, 2016
By Martin Regg Cohn

Times change - and the politics of climate change along with it.

Remember when global warming took the world by storm a decade ago? Back then, Ontario’s Liberal government promised to phase out coal-fired power plants and phase in renewable energy.

The momentum for change slowed when carbon pricing grew politically costly for the federal Liberals in their losing 2008 election campaign, weighed down by their unpopular “Green Shift.” In tough economic times, Queen’s Park also took a hit - and took the hint - putting renewable energy and global warming on ice.

Now, after years of delaying and dithering, time’s up. Rising temperatures, growing political momentum, and declining world oil prices (which ease the impact of carbon fees) have created optimal conditions for action.

Perfect timing for Premier Kathleen Wynne to unveil her Climate Change Action Plan this week. But in politics, as in economics, there is no such thing as a sure thing.

True, the long-delayed plan is getting warm reviews from environmentalists. And it has survived a pummelling from the opposition Progressive Conservatives (who seized on a leaked version of an early PowerPoint), implying the government would somehow phase out natural gas in 14 years.

While that scare story is fading from memory, let’s not forget our recent political history, because public fealty toward the environment is remarkably fickle: Everyone loves to hate the rise in greenhouse gas emissions, but hates paying for reductions.

Mindful of that contradiction, the Liberals are trying to avoid inflicting pain on the public - and themselves. Despite the call from political purists (though not so many environmentalists) for a straightforward carbon tax - what you see is what you pay - the government has learned the lesson of previous eco-taxes that became easy targets for public resentment.

The cap-and-trade scheme that Ontario is now adopting - following the lead of Quebec, California and much of Europe - is virtually invisible and hard to make understandable. That very incomprehensibility makes it more palatable to the party in power, harder for the opposition to pounce on, and tougher for columnists to explain concisely.

There is much to be said in defence of cap and trade in theory - notably that it imposes a hard cap on overall emissions that is ratcheted down in successive years. That means greenhouse gases will be reined in one way or another - unlike the environmental uncertainty of a carbon tax, which merely collects revenue from polluters but doesn’t necessarily shut them down (if they choose to treat it as a cost of doing business).

But in practice, it is the second half of the equation - the “trade” in cap and trade - that is the hard part, wherein polluters buy and sell unused emissions allowances (credits) at auction to meet their assigned targets. It is a messy system - markets always are.

There is good reason to be skeptical about the ability of Ontario’s Liberal government - with its mixed record of mismanagement - to execute, oversee and regulate such a complex scheme. Especially under the stewardship of its all-knowing but ever-erratic environment minister, Glen Murray.

Beyond the obscurities and complexities of cap and trade, the government’s new five-year action plan will attract attention in other areas sure to hit people between the eyes, if not their pocketbooks: Cold cash for global warming as Queen’s Park improves incentives for people who buy pricey electric cars.

Existing rebates of up to $14,000 per electric vehicle will be expanded, and low-income motorists will get incentives to trade in their old gas guzzlers, as the Star’s Robert Benzie reported earlier this week (dubbing it a “cash-for-clunkers” program). There may be sound environmental and economic reasons for giving people a nudge that eases the sticker shock from electric cars. But it will always rub the rest of the voting public the wrong way that their tax dollars are cross-subsidizing someone else’s pricey vehicle.

Those subsidies (and others for home energy audits and conservation) will be covered by the nearly $2 billion collected starting next January as fuel goes up 4.3 cents a litre at the pump and an average $5 comes out of monthly natural gas bills (nope, not being banned, just taxed). The plan purports to take money from one pocket and put it in another, all for the greater good, more or less.

But for all the heavy lifting that went into the plan’s conception, it is in the execution of cap and trade that the Liberals will be judged - and held to account. One more reason, as Ontarians factor in the inexorable gloom of global warming, to be pessimistic.