Environmental commissioner says cap and trade is on "right track" but outlines areas for improvement

Ontario made "significant progress" to reduce greenhouse gas emissions in 2017, but the government's Long-term Energy Plan remains incompatible with climate goals, the  province's environmental commissioner o says.

Dianne Saxe presented her annual Greenhouse Gas Progress Report Tuesday morning, summarizing the state of  provincial carbon emissions.

"The cap and trade program is complicated and has room for improvement," she stated. "But it has put Ontario on the right track."

She added that the province is "probably" on track to meet its 2020 climate goals, but that it would be much more challenging in 2020-30.

The province's four carbon auctions were "rousing successes," according to Saxe, and raised $1.9 billion for the Greenhouse Gas Reduction Account. These auctions exceeded their floor prices, the commissioner noted, adding that "the cap and trade system is starting to motivate change."

But Saxe said that there's room for improvement in Ontario's nascent cap and trade system. She explained that freight transportation by truck is the fastest growing source of emissions in Ontario, but the government has subsidized natural gas trucking.

"The government has chosen some ideas that are popular with stakeholders, instead of those that are likely to be most effective," she writes in the report.

Other policies come in for criticism too. She explained that building more roads in busy areas does not reduce congestion,  because of the well-observed phenomenon of induced demand. She also said that the government has not implemented well-designed road pricing, and singles out for criticism the government's backtracking on allowing the provincial capital to toll roads. "It was very poor policy for the province to deny Toronto's request to charge road tolls, which would have been used to fund badly needed transit," she writes, adding her own emphasis. "Municipalities should be able to use road pricing to pay for their share of public transit investments,."

She also recommended that the government should "phase out diesel truck retrofit subsidies," "fund initiatives designed to take older, less efficient diesel trucks off the road," and "support only those renewable natural gas trucking projects that do not have a pipeline connection." She recommends that each ministry  be held accountable to carbon goals.

She also offered an assessment of the Progressive Conservative platform promise to scrap cap-and-trade for a carbon tax.

"The research that we've seen suggests that changing policies delays progress," the commissioner said at her presser. "There isn't any jurisdiction in the world that has changed from cap and trade to a carbon tax." That said, Saxe conceded both policies could work.

Environment Minister Chris Ballard said he was pleased with the report.

"I think that, overall, it's a very positive report," he told QP Briefing. "I was certainly delighted to see her agreement that cap and invest is the best way to reduce our carbon pollution reduction for the least cost," he added in a not-so-veiled criticism of the PC carbon tax plan.

The commissioner had also noted that she expects cap and trade revenue to be lower in 2018, in part a result of the market adjusting to the addition of California and Quebec and also the uncertainty in the first half of the year due to the scheduled June election.

Ballard conceded that that's the case, but explained that, because of conservative estimates, the ministry remains prepared for lower revenue and what that might mean for the projects funded by it.

Peter Tabuns, the NDP's environment and climate change critic, pointed out some shortcomings, however.  "The commissioner was very clear that the Ministry of Energy's Long-term Energy Plan is going in a direction contrary to where Ontario has to go, and that's a huge issue. That's something the province has to address. Clearly, the Liberals are talking about this a lot, but in very key areas they aren't taking action that has to happen."

Ballard said he's frequently in touch with Energy Minister Glenn Thibeault and that part of the reason for the commissioner's finding is the scheduled shutdown of two nuclear plants in the 2020s.