Lost Funding - NRU

Friday, July 6, 2018

NRU Publishing

Rachael Williams 

Premier Doug Ford’s cancellation of the cap-and-trade program could leave the City of Toronto with a $393-million shortfall
in anticipated revenues for environmental programs. Implemented by the former Liberal government to help reduce greenhouse emissions in Ontario, the cap-and-trade program generated nearly $3-billion in revenue in its first year by creating a marketplace
around pollution. This money was to be channeled through a number of provincial programs, including the $377-million Green
Ontario Fund (GreenON) and reinvested in initiatives that reduce carbon pollution.

“I think people were talking about this ‘slush fund’ as though the money raised from cap-and-trade was just vanishing into a hole somewhere, but now we’re realizing that actually no, it was funding a bunch of good programs, a bunch of infrastructure builds, a bunch of things that we, the people, need and we want,” said Environmental Defence programs director Keith Brooks.

Municipalities were set to receive a portion of that revenue for a number of environmental initiatives to facilitate the transition to a low-carbon economy. Toronto was to be the largest benefactor, with $316-million committed to funding social housing repairs, $25-million for cycling infrastructure and $52-million for local projects under the Municipal Challenge Fund.

“The biggest concern for us is the social housing retrofits,” said Toronto Environmental Alliance campaigner Dusha Sritharan. “Two years ago we were at a place where social housing units were going to be closed because of the state of disrepair and funding from cap-and-trade was one of the main reasons we were going to be able to avoid those closures.”

The province had committed $316-million over four years in support of energy efficiency retrofits of social housing through the Social Housing Apartment Improvement Program, $43-million through the Social Housing Apartment Retrofit Program and $2.39-million through the GreenON fund. Of that, $129-million has been received, with the remaining balance contingent upon proceeds from a carbon market that no longer exists.

City of Toronto’s environment and energy division policy and research manager Mark Bekkering told NRU it is too early to tell whether any projects are at risk of being cancelled.

“We have not had any discussions or communications from the province on [its] plans,” he said.

Former Premier Kathleen Wynne had also indicated that revenue from the cap-and-trade program would be committed to easing GO Transit fares for rides within the City of Toronto and for GO train trips less than 10 kilometres as a way to make GO competitive with TTC faresand ultimately free-up space in the city’s local transit network. It would have also been used to fund Regional Express Rail, a program designed to increase the frequency of GO trains on the Lakeshore, Barrie, Kitchener, and Stouffville and Milton lines.

“We have to electrify the system in order to get ridership up and emissions down and that was in part funded through cap-and-trade,” said Brooks, noting the need for improved transit options in Toronto.

Cancellation of the cap- and-trade program is also causing economic uncertainty, as Ontario companies that had purchased close to $3-billion in permits under the cap-and-trade system have not been told whether or not they will receive any compensation. Permits were issued by the government to companies specifying how much carbon the company could burn. If a company wanted to burn more than its share of carbon, it had to purchase permits through government auctions or companies that had surplus allowances.

“There were a lot of people who had made business decisions based on the idea that Ontario had committed to essentially a climate change adaptation and mitigation regime,” said Ontario Environment  Industry Association executive director Alex Gill. “This kind of uncertainty is not great for businesses.”

The OEIA is a non- profit business association representing over 160 environmental companies across the province. Gill told NRU his members have also installed energy-saving technology and invested in better cladding to reduce their carbon footprint and are disappointed that it is no longer a priority for the incoming government.

The shift away from the green economy could also shut Ontario out of an expansive global market and impede entrepreneurial growth in the province, stressed Gill. “We don’t want to send a message to entrepreneurs to go somewhere else if they want to develop the next generation of green technology because Ontario isn’t ready for it,” he said.

Provinces that do not enact a carbon pricing scheme will have a national carbon tax imposed upon them under federal legislation. Ford has earmarked $30-million to challenge the federal tax in court.


Posted with permission of the publisher of NRU Publishing Inc. Original article first appeared in Novae Res Urbis – Toronto Edition, Vol. 22 No. 27, Friday, July 6, 2018.