Cap-and-trade auction little more than a cash grab

It’s hard to imagine how even Premier Kathleen Wynne’s incompetent government could screw up its first auction of carbon credits to major industrial emitters Wednesday under its new cap and trade plan.

That’s because this one only involves Ontario industries and the province established all the rules.

The bigger gamble will come next year when Ontario joins the roller coaster California-Quebec cap and trade market.

Essentially a highly speculative stock market trading in carbon credits, it’s been crashing with alarming regularity.

Three of its last four quarterly auctions have seen dismal sales of carbon credits, underfunding the two governments’ promised green energy programs by hundreds of millions of dollars.

Ontario’s first auction is a confusing and little-understood affair.

Of 240 greenhouse gas-emitting industries which fall under Wynne’s cap and trade scheme, 102 are getting free carbon credits from the government — free money, courtesy of taxpayers — for at least the first four years of the program.

That’s to prevent them from bolting to other jurisdictions that don’t have a national carbon pricing scheme, such as the United States, our largest trading partner.

Indeed, it’s particularly reckless for Prime Minister Justin Trudeau to be imposing a national carbon price on Canadian consumers and taxpayers when the U.S. is heading in the opposite direction under President Donald Trump.

What Wynne and Trudeau are doing is saddling the Canadian economy with a new cost of doing business that our American competitors don’t have, necessitating the need for ever-increasing public subsidies to convince businesses to stay in Canada, instead of bolting for the U.S. and other jurisdictions without carbon pricing.

The Wynne Liberals expect each carbon credit – entitling the bearer to emit one tonne of industrial carbon dioxide or its equivalent – will have an initial auction price of about $18, raising $1.9 billion annually for their government.

All Ontario taxpayers will pay for this in the form of increased prices on almost all goods and services, since almost all consume fossil fuel energy.

The Wynne government says the initial cost to Ontario households will be $156 annually in higher gasoline and natural gas prices alone, but its own revenue projections suggest the actual cost will be almost $340 per household per year.

Whatever the number, the cost of living for Ontarians will increase because, while Wynne and Climate Change Minister Glen Murray insist carbon pricing “makes polluters pay”, the reality is these businesses simply pass along their increased costs to the public in the form of higher retail prices for most goods and services.

Europe’s 12-year-old cap and trade market, the Emissions Trading Scheme, on which Ontario’s is modelled, has been far more efficient at raising the cost of living than lowering emissions.

Finally, Wynne’s scheme is not revenue neutral – lowering other taxes so that the government’s overall revenue from cap-and-trade doesn’t increase total revenues – meaning it’s basically a cash grab by the cash-strapped Wynne government, not a genuine emissions reduction plan.

Toronto Sun by Lorrie Goldstein

March 21st 2017

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