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Tuesday, February 25, 2020
Connecting Our Communities

Cap-and-trade scheme squeezes consumers, businesses

Groups such as The Greater Kitchener Waterloo Chamber of Commerce aren’t happy with latest Wynne money grab

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Resolved to take more money from Ontarians, the provincial government rolled out its new cap-and-trade scheme Jan. 1. Though short on details about how it will help the environment, the program certainly raises the cost of transportation and heating fuels for consumers and businesses alike.

Drivers felt the hit at the pumps immediately, and the increased costs of heating and electricity are now working their ways through the system.

For businesses, there will be higher operating costs, with the potential that larger companies will keep working towards greater energy efficiencies.

The idea behind the cap-and-trade program is to limit large corporations’ emissions, attempting to slow down the onset of global warming. Businesses now have a cap placed on the number of tonnes of emissions they can produce. If they are over that cap, it will cost them. They can buy or trade extra credits from companies that are below their emissions cap.

There is an extra cost to consumers, as can be seen at the gas pumps this week, and will show up on their monthly heating bills if they use natural gas. The government predicts an increase of $13 per month for the average household between heat and running cars.

Paul Parker is a professor in the Faculty of the Environment at the University of Waterloo. He says any positive impact on the environment will take time, and work slowly.

“It is a very small nudge,” he said. “With the current discussions where the suggestion is that it will increase prices at the gas pump for example, by four cents a litre, I would suggest that is a very gentle nudge that is going to make a very small impact. We often see a four-cent change from the weekend to the weekday. Prices change. We were at $1.40, now it is down to $1.10 or less. Will it change a lot of people’s driving behaviour? I think it will be a very small change. Now, there are going to be different allowances year to year, but it is going to be pretty incremental.”

Although the changes to consumers are minimal, The Greater Kitchener Waterloo Chamber of Commerce isn’t happy with the impact on its business members. The local organization, along with 19 other chambers from across Ontario, are voicing their displeasure with the Wynne government program, having lobbied unsuccessfully for a year’s delay in its implementation.

“What we want to do was to bring the concerns of the business community in Waterloo Region to the attention of our local MPPs here and to the entire Ontario government that there are concerns about the cap and trade program among all sectors of the Ontario economy,” said local chamber vice-president Art Sinclair.

The chamber also recognizes the issues the new cap-and-trade program could bring to rural areas such as Woolwich and Wellesley.

“The price of electricity is generally higher in rural Ontario than it is in urban areas. The people on the farms, their bills are pretty high. As an alternative, people have been looking at natural gas, well now, with the cap and trade, the price of that is going up as well. That is counterproductive to everything that we have been doing with the provincial government trying to get better access to natural gas in Ontario,” he said.

Parker says there are examples of cap-and-trade systems working. Namely, with acid rain.

“The success story of cap and trade here was the limiting of the amount of sulphur that can go into the atmosphere, and because it was a small number of large companies, that worked quite successfully. They were able to reduce the sulphur, and the companies were able to see what worked better to make everything work more efficiently,” he said, adding there are more publicized stories of failure, adding to the negative public opinion of cap and trade. “There is the story out of Europe where there were too many allocations, so the price of carbon falls very low, and there is very little effect.”

The key may be increasing the price of carbon emissions to actually see any environmental change, says Parker.

“There are two different experiences and I think the trick is chasing what the cap is supposed to be so that it will actually both reduce emissions and put it at a price that start changing behaviour.”

Sinclair and the chamber don’t want the issue to be swept under the rug as accepted fact, however. They aren’t happy with the way things are right now.

“We just want to bring that forward to the province’s attention. Just, yeah, we know the program was coming into effect, but we want the province to know that there are concerns among the business community,” said Sinclair.

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