March 29, 2007

Province too timid on environment

One per cent of gross domestic product in Ontario is roughly $5.4 billion.

It's a lot of money, to be sure, and it's how much Ontario – all jurisdictions – should be spending in the fight against climate change. That is, if you endorse the wisdom of British economist Nicholas Stern, as the McGuinty government has on several occasions.

Whether you believe the amount is too high or too little, it at least offers us an economist's point of reference. So with the release of the Ontario budget last Thursday, Stern's 1 per cent goal makes the $125 million allotment of "green" funding appear, well, quite skimpy.

"We have the premier saying this is one of his Top 2 priorities, but this wasn't really reflected in this budget," says Keith Stewart of WWF-Canada.

"They're spending more on expanding highways than on the climate plan. The carbon math just doesn't add up."

And this assumes all $125 million is going toward climate-change initiatives, which isn't the case. Some of it goes toward improving drinking water and wastewater systems, diverting waste and cleaning up industrial "brownfield" sites – all worthy causes, but hardly falling under the climate-change umbrella.

Nearly $27 million alone is going toward research into biomaterials, created out of corn and other crops, which can be used to make next-generation car parts and products.

Again, there's nothing necessarily wrong with this kind of investment. Using agricultural materials instead of fossil fuels to make SUV parts may limit CO{-2} emissions, but it's far from being the biggest bang for the buck – it's more about auto-sector and agricultural competitiveness and less about managing a climate that could seriously hurt future crop yields.

"When it comes to cars, you really want to have investment in public transit, better planning and more efficient vehicles," says Stewart.

Now, to be fair, the government did say in its budget that another $200 million has been set aside "to fund further climate change initiatives" over the next three years. It's anticipated this money will be part of a government climate plan to be revealed next month.

But, in Stern terms, it's still chump change for such a massive problem. And it appears it will be taken from the $586 million to come from the federal government's Clean Air and Climate Trust.

In other words, this budget relies on federal tax dollars to completely fund Ontario climate programs that should be largely supported by provincial tax dollars. Federal funds should be considered a top-up, not a replacement.

And next month's climate plan? Well, $200 million doesn't get you much, at least if you expect the voting public to see a serious commitment in the battle against global warming.

That said, wowing the public could come in the form of regulation. It wouldn't require immediate funding and could be addressed in future budgets. This has led some to suspect that Ontario may be considering a carbon cap-and-trade program for big industry, including power producers.

In line with this, there's been speculation that Ontario is exploring the idea of joining the Regional Greenhouse Gas Initiative, an agreement between nine states in the U.S. northeast and mid-Atlantic. Known as RGGI, the initiative will establish a regional cap-and-trade program and emissions trading system aimed initially at power producers.

The Harper government has steadfastly rejected the cap-and-trade option, particularly on an international scale. An Ontario move in this direction, similar to that U.S. maverick California, would certainly spark much-needed debate about establishing a national or continental system.

Next month's climate plan could also introduce revenue-neutral tax policies that reward good environmental behaviour and punish bad behaviour – similar to the SUV levy and energy-efficient car rebate in the federal Conservative budget.

And more announcements could be made around the electricity and natural gas markets, since any initiatives there are funded by ratepayers and not through the tax base.

Whatever is in the cards, it's clear that something creative must be done if, as the polls suggest, voters are calling for real action on the environment.

One tidbit in the budget worth noting is the $3 million that will go to the Ontario Sustainable Energy Association. It's not a lot, but it could go a long way in promoting community-based clean power projects.

"We're thrilled," says Deborah Doncaster, executive director of the association. "We can do a lot with $3 million."

The money will provide much-needed funding for community co-op projects that can't raise start-up capital but want to participate in the province's new standard offer program for renewables.

Doncaster says the $3 million, while intended for grants, could eventually form the basis of a larger revolving loan program that would support more projects.

The fact that this association is "thrilled" to get $3 million, four years after asking for it, tells us a lot about how starved such groups have been for government support.

For the rest of us, Mr. Guinty, it's going to take a lot more.

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