Ontario plan helps vindicate BC position on climate

Carbon pricing has arguably gone mainstream in Canada, with our largest province planning to implement a cap and trade system. And Ontario’s announcement is just the first in what we expect to be a year full of discussion and debate on climate issues

jIf Premier Christy Clark and other senior BC government leaders feel encouraged by Ontario’s decision to join the club of carbon-pricing jurisdictions, they have good reason. It ought to put a spring in Clark’s step this week when she speaks on BC’s climate policies at the Spring Meetings of the World Bank and International Monetary Fund in Washington DC. She’s the first Canadian premier ever to receive such an invitation.

Ontario’s announcement means that BC’s 2008 gamble to stride ahead on carbon pricing appears to be paying off. One of the great fears at the time the BC carbon tax was introduced was that our province would be left at a competitive disadvantage if no other regions followed suit. Each region that steps up with its own carbon pricing policy reduces that risk, and gives BC politicians one more opportunity to boast about their role as leaders in the movement.

Economic concerns

The big question being asked by the Ontario government’s critics is, how much is this going to cost us? Ontario Premier Kathleen Wynne is mum on that, saying the plan is still being designed. However, we can make pretty good guesses about what the Ontario cap and trade program will look like considering that it is being developed alongside those of Quebec and California, who are all members of the Western Climate Initiative along with BC and Manitoba.

The cap and trade systems in Quebec and California are responsible for adding between 2 and 3.5 cents per litre of gasoline, and it would be surprising if the Ontario system resulted in anything substantially different. BC’s carbon tax is more stringent, adding 6.7 cents per litre as of 2012.

In the months ahead, look for a lot of speculation on how an Ontario cap and trade system will impact the investment environment, particularly in terms of natural resources.

One likely topic will be its effect on resource development in Ontario’s Ring of Fire region. The argument will likely be made that carbon pricing will heap yet more burdens on some already troubled developments. However, compared to the far more daunting challenges the region faces around transportation infrastructure, power demands and water management, it’s doubtful the cap and trade system will make a material difference in anyone's final investment decision.

Meanwhile, the Ontario government can always point to BC if it is criticized on the economic front. In fact, it already is. A backgrounder released alongside yesterday’s announcement points out that BC has reduced its fossil-fuel use by 17 percent since the carbon tax was implemented, during which time its economy also outperformed those of most other provinces.

Expect much more carbon talk this year

Looking ahead, we can expect a great deal more discussion on carbon policies, particularly carbon pricing. A meeting of provincial leaders on climate issues kicks off today in Quebec City; Christy Clark is speaking to world financial leaders on the issue this week in Washington; Ontario will be unveiling details around their cap and trade plan over the next six months; Canada needs to produce its latest emissions updates and targets for the global climate summit in Paris in December; and throughout it all we have a federal election to look forward to where climate policy is already emerging as a major wedge issue.

And to think that in 2008 many worried that BC would be a lone voice in the wilderness on the climate issue.

Peter Severinson is the research director for Resource Works. Follow on Twitter: @pseverinson

Do you like this?