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Six Steps in Transparency that Ontario should adopt to Nurture Cap and Trade

Six Steps in Transparency that Ontario should adopt to Nurture Cap and Trade - SMV Energy Solutions

More needs to be done to ensure the success of Ontario’s Cap and Trade (C&T) program, otherwise misinformation and misunderstanding will be manipulated by politicians and others to scuttle it, and keep the status quo. Ontario needs to expand on its commitment to greater transparency, and accountability in the following 6 areas:

1. Education

Not enough information is available to educate the public about C&T, and its benefits in transitioning from a fossil fuel economy. It is a good investment for the government to get people, politicians, and businesses onside to prepare for higher gasoline, natural gas, and electricity prices, otherwise it will a lightning rod for dissent.

2. All C&T charges should be identified as a separate charge, like the HST 

Consumers, and businesses don’t complain about the HST (harmonized sales tax for the provincial and federal governments) anymore because it is understood, and clearly identified as a separate item on a bill. Businesses pay the net amount to the government of what they charge customers, and pay suppliers. The government likes the HST because it provides a regular cash flow.

This is how the C&T charge should operate for the carbon tax portion of the program which is applied to consumers’ purchases of petroleum fuel, natural gas, and electricity.  Right now, distributors will be hiding this cost in the “delivery”, yet a recent poll showed that Ontarians want to see the C&T charge shown separately. 

Ontario should require that the distributors of petroleum fuel, natural gas, and electricity report the C&T charge separately in keeping with its commitment to full transparency. It is in the best interest of the government, businesses, and consumers to become familiar with this cost to reduce greenhouse gas emissions.

3. Businesses should treat C&T charges like the HST

Local businesses keep the local economy going, and the C&T charges may be a tipping point to prevent a business from leasing a commercial space because of higher heating and electricity costs. Even if this is a perception since the electricity and natural gas distribution companies have been modernizing their old monopolies and have streamlined their operations and reduced costs in anticipation of the C&T charges, the perception can be damaging. If this were to happen, the C&T charges would detrimentally affect the viability of a city’s commercial sector. 

It makes sense to treat the C&T charges like the HST, which will help businesses offset this cost, and also provide information on their own GHG (greenhouse gas) emissions. The C&T program shouldn’t be a make-or-break consideration for small businesses.

4. More up-to-date reporting of GHG (greenhouse gas) emissions

Right now, GHG emissions reporting and verification by mandatory participants has a lag time of 1.5 years. In other words, the province’s 2015 emissions will become available mid-2017. This isn’t bad, but having more up-to-date information would be useful in monitoring the program, and to be more accountable.

For the government, treating the C&T charges like the HST would also provide another large data base from which to report emissions and revenue, but it would be more current than the emissions reported by mandatory participants. 

5. Enforcement

Just like any program, there has to be compliance enforcement for it to be effective. Right now, enforcement is at the discretion of the MOECC, and judged on a case by case basis. This is not a transparent practice. What makes it worse is that the MOECC (Ministry of the Environment and Climate Change) is using old information.

At a minimum, mandatory capped emitters that choose not to comply with the program requirements should be listed on the MOECC public database. This type of transparency would be also valuable to a potential purchaser of the facility if there are any non-compliance issues. If emissions over the cap are owed and have not been purchased, the outstanding amount could be tens of thousands of dollars, or hundreds of thousands of dollars. Likewise, if there are MOECC fines owing that have not been paid. A potential purchaser needs to know this in advance.

6. Expansion of the rebate program to ease the transition to more energy efficient appliances

Rebates on LED lightbulbs have been effective in bringing down their price to more than half of what it was two years ago, but more needs to be done to encourage the switch to more efficient but still expensive modern appliances.

Government money would be well spent to expand the rebate program in terms of coverage, and to increase the amount of reimbursement. For example, a new house furnace costs $4,000- $5,000 installed, and there is only a $250 rebate. The same $250 rebate applies to a business. This isn’t a large enough incentive to replace a badly working old air conditioner, or furnace. 

Ontario’s C&T’s program will go through growing pains; however, it is critical for Ontario, consumers, and businesses that it is successfully implemented. All of us are affected by the effects of climate change. It is time to stop playing games, and make things work that benefit all of us. These 6 suggestions will ease the growing pains, and get the program off to a good start so that all of us can get serious at addressing climate change.

 

Sharolyn Mathieu Vettese
President
SMV Energy Solutions
www.smvholdings.com

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