Chambers cite high costs of program on top of rising electricity prices, lack of sector-by-sector economic impact analyses and a changed policy direction of the United States.
Today 20 chambers across Ontario called for a deferral of the provincial government’s Cap and Trade program scheduled to be implemented January 1, 2017, citing the rising costs of doing business, the need for time to prepare, a lack of sector-by-sector economic impact analyses and a change in policy direction in the United States.
In Ontario, the rising cost of electricity is the greatest source of frustration for small businesses. A survey conducted by the Ontario Chamber of Commerce found that 33% of small businesses may delay or cancel investment because of increasing energy prices. A recent report by the Auditor General found that residential electricity bills may rise another 23% between 2015 and 2020. The introduction of the cap and trade system will add further charges on natural gas, gasoline and diesel fuel that will be felt by every individual and business in Ontario.
Shirley de Silva, President and CEO of the Sarnia Lambton Chamber of Commerce says, “Businesses are struggling to pay their electricity bills. It’s their number one frustration we hear about. We also hear that they need more time to understand and prepare for such a complicated new economic system as cap and trade.”
The Sarnia Lambton Chamber has joined 19 other Chambers across Ontario to request that the Ontario government delay the implementation of the cap and trade program for at least one year. The Chamber network has already voiced this message in the past, along with calls for an economic impact analysis in order to understand which sectors will be most affected.
“We are concerned that policy makers don’t know the full impact that cap and trade will have on Ontario. Nor do they know what will happen given the recent US election and the Prime Minister’s decision to mandate carbon pricing. We are extremely concerned about the impacts this uncertainty and added costs will have on jobs and the economy.”
An unintended consequence of implementing cap and trade this early is industry and businesses could leave the province for other jurisdictions that do not have a carbon price or an electricity grid that’s as clean as Ontario’s. “This would negatively impact not only jobs and the economy, but also the environment,” says de Silva.
- The recent Auditor General concerns outlined in her recent report (Chapter 3): http://www.auditor.on.ca/en/content/annualreports/arreports/en16/v1_302en16.pdf. Some of the report’s main concerns are presented below:
- The cap-and-trade system will result in only a small portion of the required greenhouse-gas reductions needed to meet Ontario’s 2020 target.
- Cap and trade is expected to bring higher electricity prices, which may lead people to switch to cheaper natural gas—a fossil fuel that also produces greenhouse gases. Between 2017 and 2020, the Ministry of Environment and Climate Change plans to spend up to $1.32 billion of cap-and-trade revenues to address this issue. The Action Plan indicates that this will result in 3 Mt (megatonnes) of reductions. However, neither the Ministry nor the provincial agency that oversees Ontario’s electricity system could show how they arrived at the 3-Mt estimate. In addition, the $1.32 billion is expected to have only a small impact on reducing the expected electricity price increases. In particular, electricity prices are projected to increase by 14% for businesses and 25% for households; after applying the $1.32 billion, businesses will still face a 13% increase and households 23%.
- No plan for achieving renewable natural gas goal.
- Climate Change Action Plan commits about $1 billion to previously approved initiatives: some initiatives were approved years before the Action Plan was created. By including these projects in the Action Plan, the Province has found an alternative way to fund their costs— but will not achieve any additional emissions reductions
- Under the linked system, Ontario’s cap does not actually control the amount of greenhouse gases that can be emitted in Ontario: Because Ontario has chosen to link with California and Quebec, Ontario may exceed its own emissions cap if Ontario emitters decide to purchase allowances from Quebec or California. The cap on emissions set by the Ontario government consequently does not actually control Ontario emissions.
LIST OF PARTICIPATING CHAMBERS
Ajax Pickering Chamber of Commerce
Burlington Chamber of Commerce
Chatham-Kent Chamber of Commerce
Greater Kitchener Waterloo
Greater Peterborough Chamber of Commerce
Greater Sudbury Chamber of Commerce
Hamilton Chamber of Commerce
Ingersoll Chamber of Commerce
Kingston Chamber of Commerce
London Chamber of Commerce
North Bay Chamber of Commerce
Northwestern Ontario Associated Chambers of Commerce
Newmarket Chamber of Commerce
Sault Ste Marie Chamber of Commerce
Sarnia Lambton Chamber of Commerce
St Thomas & District Chamber of Commerce
Thunder Bay Chamber of Commerce
Tillsonburg District Chamber of Commerce
Timmins Chamber of Commerce
Windsor-Essex Chamber of Commerce