Ontario Ups the Ante Against Federal Carbon Tax

Cleantech Investing
Cleantech Investing

Doug Ford at a press briefing on Wednesday announced that his province would fight carbon tax with all the means it has at its disposal.

The Ontario government announced on Wednesday (March 13) that it would do what it takes to fight the federal government’s carbon tax with every means that’s available to the province.

The federal government’s carbon tax is imposed on provinces that don’t have their own systems in place and comes into effect on April 1.

Ontario Premier Doug Ford along with his Minister of the Environment, Conservation and Parks, Rod Phillips made the announcement at the Challenger Truck Factory in Cambridge, Ontario.

“The federal carbon tax is going to hit your family’s budget like a tonne of bricks,” Ford said. “A carbon tax will make no difference to the environment. It will drive up the cost of gas for your car, home heating bills will go up and the cost of getting food to your grocery store shelf, that’s going up.”

While Ford denied the connection between the carbon tax and environment, he did, however, link carbon tax with jobs.

“A carbon tax will do also chase jobs out of Ontario, manufacturing jobs, small business jobs and trucking jobs. Because… it is clear you can be for jobs or you can be for a carbon tax, but you can’t be for both. That’s why I’m ringing the warning bell.. that the risk of a carbon tax recession is real.”

In October 2018, the federal government announced its intentions of imposing a federal system on provinces that hadn’t decided their plans on putting a price on carbon pollution. The provinces where the federal system would be in place include Ontario, Manitoba, Saskatchewan and New Brunswick.

The plan to impose a Pan-Canadian framework has been in the works for two years as part of the federal government’s plan of meeting its greenhouse gas (GHG) emission reduction target. In a backgrounder published in May 2017, the federal government detailed how the fee would be imposed on each tonne of emissions from fossil fuels.

While the impact of the tax on a household will vary across the province, the federal government estimates that an average household in Ontario would pay C$244 in direct and indirect costs for carbon.

However, the tax collected from the provinces would be repaid back to households under the Climate Action Incentive Payment system. The federal government estimates that an average household will receive C$300 which translates to a net benefit of C$56.

What’s more, the federal government is also set to use additional amounts from the proceeds to support affected sectors which it says, “will help save money and create good jobs.” These areas include schools, hospitals and small and medium sized businesses. In Ontario, the federal government estimates this additional amount to be C$1.45 billion over the next five years.

It was also noted that the federal system would use the direct proceeds from industrial facilities to support reductions in greenhouse gas emission.

Meanwhile, Philips highlighted at Wednesday’s conference the Ontario government’s Made-in Ontario Environment Plan promises to lower GHG emission in line with the federal government’s target.

Although the plan doesn’t exactly detail how emissions will be reduced, it however doesn’t impose a carbon tax.

“We have a plan that serves as proof that a carbon tax is not the only way to fight climate change,” Phillips said. “It’s a plan that balances a healthy environment with a healthy economy, because that is what our province deserves.”

Ford highlighted how the transportation sector in particular would be affected with the introduction of the carbon tax, owing to a rise in fuel prices.

“Every single time, a trucker fills up the tank, the carbon tax will take a bite out of the employer’s pockets,” he said. “That’s money that could be used to hire new workers or upgrade their fleets.”

Ford and Philips were joined by Amy Fee, MPP for Kitchener and Dan Einwechter, CEO of Challenger who voiced his opinion on carbon tax.

“The future direction of our industry is closely tied to the health of our country’s economy and that of our neighbours,” Einwechter said. “Our industry like so many others is impacted by the federal carbon tax which will make fuel more expensive and therefore make shipping more expensive for our customers.”

Fee highlighted how Challenger has been expanding across North America and employing “thousands of workers.”

“Our government is working around the clock to put the people of Ontario first… and to make it easier, faster and cheaper for businesses like Challenger to grow and create good paying jobs,” Fee said.

Ford stressed that the carbon tax was not the only way to fight climate change and that Ontario has an environment plan “that works.”

While Ford assumed office in June 2018, the province at the time of unveiling its environment plan in November 2018, stated that the GHG emissions were already reduced by 22 percent from 2005 levels under the Paris Agreement.

It has to be noted that the Ontario government highlighted its energy sector as one of the reasons for the reduced emissions at the time of unveiling its environment plan. The province said that its energy grid is one of the cleanest in North America due to the combination of nuclear, hydro and other renewable energy sources.

However, in his first month, Ford notably among other things cancelled over 750 renewable energy contracts that caused renewable energy stocks to slide on the Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV).

In an email statement to the Investing News Network (INN), Brandy Giannetta, Canadian Wind Energy Association (CanWEA) regional director for Ontario, reflected on Ontario’s announcement.

“As each jurisdiction makes choices about how carbon will be priced, CanWEA remains committed to working with energy stakeholders to maximize the social, economic and environmental advantages that wind energy can return to Canadians.

“As the lowest-cost source of new electricity across Canada, the wind energy industry is ready for the expanded use of clean, renewable electricity needed to power Canada’s transition to a prosperous low-carbon future,” Giannetta said.

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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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