Ontario's brave new cap and trade program
Apr 2, 2015

Ontario's brave new cap and trade program

The Globe and Mail just broke the story on what will likely be the defining component of Kathleen Wynne's legacy: The Ontario Liberals are introducing a big cap and trade plan. Details are sparse as yet, but it looks like they will be joining the Quebec/California regime. This is huge news, especially given Ontario's relative prominence in Canada's economy.

While BC (under the Liberals as well, incidentally) were moving forward with their carbon tax, Ontario Liberals had made big moves on the green energy file. With cap and trade, they are now tackling the greenhouse gas production side of the energy equation.

One of the trickiest problems of global warming is that it falls to tragedy of the commons problems.
Any individual jurisdiction has incentives to not act themselves (and thus not accrue any costs relative to others) and have everyone else take the costs while they just get the relative benefit of less climate change. To succeed we need to move beyond this kind of jurisdictional selfishness, and it takes people coming together and bravely willing to take bold actions, even when most of the provinces, the federal government, and, indeed, much of the planet are dragging their feet. There already was an argument based on the green energy file that Ontario was one of the most aggressive provincial or state level jurisdictions in North America for combating climate change. With the introduction of a cap and trade program, this will solidify that status.

Kathleen Wynne didn't have to do this. It was certainly not some key part of any election plan. At best it is politically risky. I have previously argued how dynamics regarding the Green party made a strong case for the McGuinty era Liberals to push hard on the green file, but I'm not convinced the same dynamics are as strong today after an election where anything to do with tackling climate change was very much on the fringe.  But she choose do to this, and now we have policy worth fighting for.

People debate the efficacy of cap-and-trade vs fee-and-dividend (ie carbon taxes) and any other plan we may come up with to tackle global warming. I've done so, for instance, here. Some will undoubtedly be disappointed by this particular plan to help combat global warming. Fair enough. However, given the dynamics of today where we have this pressing global problem and very little global action against it, I am going to take what I can get. Absolutely we should push for not just any solution, but the best solution, but I will do so by also giving full throated support for undoubtedly positive - even if not optimal - political action like this.

The political angle:
During the 2011 Ontario election, I wrote that the election to reelect McGuinty was, and must be, a referendum on the brave green energy plan (using feed-in-tarrifs) the Liberals had previously instituted. I have consistently lamented the NDP for not prioritizing climate change issues while the Liberals have been acting positively.

Now, however, there is hope for political agreement as the NDP has long supported cap and trade (while federal Liberals flirted with carbon taxes, particularly under Dion's "Green Shift" plan). Despite the Liberals having a majority, this a program that needs to be implemented and reinforced over decades to help its goals, and having political agreement is critical. The PCs, of course, will abhor it, and will be the advocates for those businesses who will lose under this proposal, but this can't be helped.

Regular readers will recall that I have never been a partisan between the Liberals and the NDP with a long documented history on this blog of sometimes supporting and criticizing and voting for both parties. The one issue that really forced my hand, in Ontario at least, was the green energy file with the big moves by the Liberals largely rejected by the NDP for (in my view) bad reasons. While the 2014 elections had very weird political framing, in 2011 by far the key issue was green energy for me. It is of great comfort to me that by keeping a party with a history of success on this file in office, we have been rewarded by further success on this file despite the numerous headwinds and little momentum that would seem to have been the case yesterday.

There are a lot of details to be worked out, and I'm sure we will be debating them in the time to come. But for now, at least, I'm happy we are moving in the right direction.

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