Ontario Going It Alone On Climate Change?

I attended a stakeholder consultation on climate change strategies in Toronto on Friday. The government is holding 7 or 8 of these sessions with industry, non-governmental organizations, municipalities etc.

The session was well attended, with over 25 participants. They included Direct Energy, which installed 20% of the energy efficient air conditioners under a recent program, City of London, Peel Region, Enwave, which installed the deep lake cooling in Toronto, International Joint Commission, Northland Power, a gas and wind electricity generator, and Ken Olgilvy from Pollution Probe, Union Gas. And the entire staff of Sky Generation.
I arrived to the session late. Evidently it takes 1 1/2 hours of sitting on the 401 to get to Yonge and St. Clair from Mississauga.

Toronto. The City that doesn’t work. It would seem to me transit should be pretty high on the list, if not for climate change, then for productivity.

One of the questions asked was, “Should Ontario proceed with its own climate change strategy?” The unanimous answer, and keep in mind there were a lot of corporations in the room, was yes. The room asked, though, that the rules be fair. For example, many of Ontario’s gas generating plants were built under “non-utility generator” contracts, and have no contractual ability to change prices. Ontario Power Generation’s fossil plants sell into the spot market, and can therefore bid higher prices if costs increase. So a carbon tax, or mandatory carbon trading regime, that penalized all players, but where the higher costs cannot be passed on by some, would clearly be unfair.

The question was asked, “What role should regulation play?” The consensus was that there is a role for regulation, but that again, it must be implemented fairly.

Ken Olgilvy made a powerful point in stating that it is essential to know where we are going. What is the objective, in the short medium, and long term. Are we merely trying to reduce emissions by 10%, which is way less than scientist believe we need to do? Or are we shooting for 75-90%, which is where the science is indicating we need to go. Because that will drive the policy decisions. Financial responsibility was emphasized, and it was pointed out that the most finanacially responsible way to implement change in regulations was to do it in a way that mirrored the normal capital cycle. For example, cars typically last 10 years, so if you want to improve fleet efficiency 10 years from now, you need to start putting your incentives, taxes, rebates, or regulations in place today. Different capital items have different replacement timelines. Refridgerators are probably 15 years. Power plants are 30 or 35 (although all of Ontario’s coal plants are within a decade or less of their natural end of life). Houses and buildings are probably 100 years. So each of these sectors need different strategies. The importance of infrastructure decisions, such as roads or transit, municipal planning etc. by government was emphasized.

Financial incentives were identified as an issue. Building a business case for an energy reduction investment requires a financial environment that will yield a good return. This means that the tax system, the price of energy, depreciation rates, grant and loan programs all matter.

The topic of full cost accounting came up. This would mean that our price of energy would include the cost of external effects. It an interesting concept, but I doubt if a government would have the political courage to implement this properly. After all, what is the cost of climate change? To the Pacific Island fisherman, who’s fish die from coral bleaching from warmer oceans, or the resident of the Bangladesh Delta, who is flooded by higher ocean water levels and larger storms, or the farmer in Ethiopia, whose land becomes to arid to farm, it is infinite. It will cost them their life unless the world undertakes a massive mitigation program – and history suggests this will not be done in anything more than an ad hoc way. The Ministry pointed out that the external cost of smog has been priced at $9.8 billion/year, in health care costs, and lost productivity. Our coal plants contribute 20% of the Ontario’s smog.

Overall it was a useful session, with good discussion, and good ideas. Government was clearly listening. I hope Ontario does create a “Made in Ontario” climate change strategy. I hope it includes a comittment to reduce emissions to 6% below 1990 levels by 2012 (Canada’s Kyoto comittment), which I believe is entirely achievable, but only if action is taken NOW. I will assess the worth of the strategy on its short term tangible comittments – 2050 is way to far out to even consider. 2012 should be the goal, with perhaps a 2020, 2025, and 2030 goal. Will the program include home energy audits, such as the recently cancelled Federal Energuide program? Will it include a directive from the Minister of Energy to the OPA to begin an immediate procurement of 500 MW of additional renewable energy, and increase the renewable energy target from 2700 MW by 2010 to 5000 MW by 2012? Will it include either increased fuel efficiency standards for vehicles as regulation, or as tax and rebate programs? Will it include investment in transit? Will it shift taxes to encourage efficiency, such as implementing sales tax on energy, instead of on energy efficiency investments? Will it include ample long term funding for conservation initiatives? Will it include incentives – loans or grants – for solar thermal hot water? Will it include incentives for ground source heat pumps, that create 4 units of energy for every unit used? Will it include other regulations of appliance and lighting (many of these are underway, but there should be an ongoing review, and upgrading of standards process)?  Will it include a fund to support development of renewable projects by community groups, as has been discussed?
The plan should even include small things. Like making it an inaliable right to all Ontarions who have a detached or semi-detached home, to have a clothesline. By-laws and private agreements banning them should be made illegal.

It is essential for the program to include tangible immediate and short term initiatives. The climate file in Canada already has too much rhetoric, and not enough action. The program will rightly be perceived as pre-election posturing unless it has tangible action today.

And the plan should include flexibility to integrate with a Federal plan, in the event that this ever materializes, with the Federal plan complimenting, and moving Ontario to even greater reductions than the province is doing alone.

And good for the Ministry of the Environment. I support their efforts in this initiative.

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