Ontario’s new climate change plan must effectively and efficiently reduce carbon emissions, but the plan must also make economic sense.
In October and November 2018, Ontario’s government asked Ontarians for ideas as it crafts a new made-in-Ontario climate change plan. We need one that effectively and efficiently reduces carbon emissions while respecting the fragile economic situations of many Ontarians.
It’s now accepted by people of most political stripes that human-caused climate change is happening. Those in the privileged, developed world have a moral responsibility to act, partly because the quality of life they enjoy now was due to decades of carbon emissions. And there isn’t much time.
The province’s new strategy must help us win both the short-term economic battles and the long-term war for the climate. And we must not lose sight of our future.
In the long term, we need to position ourselves so our economy can continue to grow without the dependence on carbon emissions. New technologies that cost less and emit less carbon but perform better are our best bets to get there. Unfortunately, while energy storage, combined with renewables such as solar and wind, is already having a significant impact, there is no magic bullet.
For new technologies to reach mass-market commercial viability, we traverse a long path of innovation, starting with publicly funded basic research and moving on to early demonstration projects, early adoption and entrepreneurial dissemination.
These early stages cannot even start without public funding. In fact, the public sector has been behind every major innovation for decades. That’s why it’s critical that we still maintain, even grow, a healthy research ecosystem for clean technologies. Otherwise, we will be left behind as other countries, such as the UK, China, Brazil, the US and Finland, continue to invest in their futures through research. One important initiative in Canada is at Ryerson, where a federally funded Canada-wide research network is working in the development of market-ready energy storage technologies.
In the near term, we need a solution to discourage carbon emissions at the lowest cost. As Ontario’s government collects climate ideas from the public, every idea should be measured against its return on investment; for example, what is its cost per unit of carbon avoided?
Some actions tie emissions reductions to economic gain. Do these first. These are things that should be happening but aren’t because of market failure. Figure out the reason for this market failure and fix it. Then consider targeted, narrow public interventions for the break-even and low-cost ideas. For Ontario, electricity contributes only 3 percent of total greenhouse gas emissions; the most promising opportunities will likely lie in transportation and space heating. An example is the electrification of cars and trucks in certain circumstances where the fuel savings and longer asset life offset the higher initial costs. Similarly, buildings whose upgrades can be offset by lower heating bills could reduce carbon emissions and also make economic sense.
In theory, a price on carbon, whether through a tax or through the soon to be scrapped cap-and-trade system, is an economy-wide mechanism that would automatically incentivize the lowest cost emission reductions. However, there is fierce resistance in some quarters. The federal carbon price is a start, but the price is too low to get the level of change we need. Also, a carbon-pricing system can be unwieldy, with high overhead costs, and the public needs to be confident in how the revenues are used.
Much of the public discourse so far has revolved around cap-and-trade, the system in which carbon emitters can buy and trade the right to pollute. But a true, comprehensive climate change strategy must go beyond a simple binary choice of a carbon price or not — it must take a broader perspective. Neither a red light nor a green light for a carbon price on its own can fully solve our climate challenge.
And while all this is taking place, we must enable sections of society that are struggling economically to participate in these climate change efforts. In the short term we must be careful that the actions taken do not financially drain these communities, and for the long term we must create a low-carbon economy that is inclusive. Skills development and education can go a long way to break down barriers and spread the wealth.
We need to think bigger and broader to ensure that our choices protect the planet for tomorrow while not placing an unfair burden on taxpayers today. We have to win the short-term battles, by pairing emissions reductions with economic gain, and the long-term war, by positioning all Ontarians to be ready to thrive in the new climate-friendly economy.
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