Sobering lessons learned in Ontario

After eight years, Ontario’s green energy policies aren’t quite playing out like they were supposed to. A new report from the C.D. Howe Institute, Ontario’s Green Energy Experience: Sobering Lessons for Sustainable Climate Change Policies, evaluated the success of the Green Energy and Green Economy Act based on its environmental outcomes, its effect on energy prices and its impact on employment in the province.

“These policies have had a dramatic impact on electricity costs in the province, but they have generated very limited environmental benefits and have had a negligible to negative effect on economic growth and employments,” says Michael Trebilcock, the report’s author and a law and economics expert.

Rising costs are one problem. The on-peak price nearly doubled from 9.3 cents/kilowatt-hour in November 2009 to 18 cents/kilowatt-hour in November 2016.

The inherent limitations and disproportionate focus on electricity are another problem. The electricity sector’s share of greenhouse gas emissions in Ontario in 2012 was only about nine per cent of total emissions, while transportation accounted for 34 per cent.

A skewed accounting of jobs gained—and lost—is yet another problem. Trebilcock says that while the Ontario government claims its green energy policies have created more than 30,000 jobs, this number does not distinguish between temporary and permanent jobs or between low-paid service and higher-paid skilled jobs. Most importantly, he says, it does not consider the jobs lost thanks to higher electricity prices.

The report suggests Canada should impose a revenue-neutral national carbon tax that promotes economy-wide cost-effective emission reductions and returns revenues back to the province from which they originated. This should be supplemented by limited, well-targeted subsidies for research and development.

“It is crucial that Canada’s private sector not bear a large overall fiscal burden,” says Trebilcock. “Moreover, in addition to domestic policies, the ability of Canadian firms to compete in global markets will also play an important role in developing a Canadian clean technology sector.”

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