‘Carbon Confusion’ is Bad for Business, Conservative Strategist Warns New Ontario Government
With Doug Ford’s Conservative Party cruising to a majority government in the Ontario election, a former Conservative strategist and chief of staff is warning that the province’s “carbon confusion” is bad for business—and its landmark carbon cap-and-trade plan will be tougher to unravel than Ford might imagine.
“If Ontario ends up with Premier Doug Ford, the province actually gets Premier Patrick Brown, at least when it comes to policies on climate change and carbon pricing,” writes David McLaughlin, a former chief of staff to Prime Minister Brian Mulroney who later went on to lead the National Round Table on the Environment and the Economy, in a June 4 opinion piece for the Globe and Mail.
Like this story? Subscribe to The Energy Mix and never miss an edition of our free e-digest.
“That’s what happens if Mr. Ford wins this week’s election and follows through on his promise to scrap the Liberal government’s cap-and-trade system for reducing carbon emissions. With no equivalent plan by the Progressive Conservative party leader yet—or maybe ever—to tackle climate change, the federal government will be required to step in and impose its ‘backstop’ carbon tax under the Pan-Canadian Framework on Clean Growth and Climate Change.”
Which is precisely what ex-Conservative leader Brown proposed in his platform—except that his plan was to buy in to the national floor price on carbon and hand the proceeds back to Ontarians as a tax cut.
McLaughlin puts some fairly gargantuan numbers behind his contention that it’ll be “costly and complicated” for businesses and taxpayers if Ford follows through on his fulminations about doing away with cap-and-trade.
“Ontario companies have already committed more than C$2.8-billion in emission trading allowances through seven different auctions,” he writes. “Another nine are scheduled to the first compliance period ending December, 2020. These have real value to the approximately 150 large industrial emitters who bought them—until cap-and-trade is gone. Unless the companies can redeem them, that value will disappear.”
And it’s not at all clear that California and Quebec would agree to relinquish the Ontario companies’ trading allowances. “That would lower the price and value of the credits for everyone, causing millions of dollars in losses to individual Ontario companies forced to sell at a discount.” The disruption would also lead to higher emissions, an outcome that “California for sure, and maybe even Quebec” would challenge in court.
Meanwhile, it would be up to Ford to prevent any disadvantage to Ontario companies in the event that he withdrew the province from the cap-and-trade system. Brown had budgeted $1.5 billion against that possibility. Ford, who very late in the election campaign released a “fully costed” program with no fiscal plan, has not.
If Ford is determined to unwind cap-and-trade, McLaughlin has two recommendations: allow a transition period for businesses by taking no action before December 2020, and use that time to “bring in an actual alternative” that will give large industrial emitters an incentive to improve their carbon performance.
“Each of these measures would reduce Ontario’s carbon exposure for business, as well as to taxpayers,” he writes. By contrast, “uploading climate policy to the federal government may make for easy politics, but will be hard on business.”