The Ford doctrine: (very) short-term gain
Long-term environmental pain the legacy of our short-sighted new premier
Ontario premier-designate Doug Ford has just been sworn in, but already we have seen a series of major announcements indicating some intended directions for his incoming government.
The first was a declaration of the intent to end Ontario's participation in the Ontario-Quebec-California cap and trade system for reducing greenhouse gas emissions. The termination of GreenON portfolio of programs, including support for home energy efficiency retrofits, intended to deliver GHG emission reductions, was announced shortly afterward. There were also indications of a plan to terminate subsidies for electric vehicles. Finally, Mr. Ford announced his support for a "life-extension" of the 40-year-old Pickering Nuclear Power plant, scheduled to close this year, until at least the middle of the next decade.
Further moves have been committed to either in the PC election platform or in subsequent statements by premier-designate Ford. These include a planned shift of energy conservation program costs from electricity rates to what will be, in light of Ford's proposed tax cuts, a rapidly shrinking tax base, a 10 cents/litre cut in the provincial gasoline tax, and an attempt to reopen contracts for renewable energy projects.
Further moves are expected on Hydro One, the provincial electricity transmission and distribution utility. The most likely option, as proposed by C.D. Howe Institute and others, is the sale the province's remaining 47 per cent share of the company. The most probable use of the proceeds would be to subsidize further short-term cuts in electricity rates.
Taken as a whole, a number of significant themes emerge from these announcements. The most obvious, and puzzling given Ford's acknowledgment of the existence of climate change, is an apparent assault on the province's efforts to combat the problem. There is also a deep dislike of anything related to renewable energy, despite the fact that globally renewables are the leading source of investments in new electricity supplies. At the same time, the incoming premier seems unquestioningly committed to the previous government's directions on the refurbishment and "life-extension" of the province's aging fleet of nuclear power plants.
At a deeper level, the new premier's directions move against initiatives intended to yield long-term benefits, like reducing GHG emissions, investing in energy efficiency, and the expansions of public transit services made possible through the revenues from the provincial gasoline tax.
The rationale for these moves seems to be to achieve what will ultimately be relatively small, and short-term reductions in hydro rates and fuel prices. The elimination of cap and trade, for example, will at best reduce gasoline prices by around four cents a litre, a reduction in the range that gasoline prices vary over a typical weekend. A sale of what is left of the province's stake in Hydro One could finance a short-term cut in electricity rates, but the one-time proceeds from such a sale would be quickly exhausted if used in such a way. The ongoing $400 million per year in dividend payments to the province from the utility would be permanently lost.
At the same time, the incoming premier's moves are embedding new long-term costs. The most obvious relates to the consequences of climate change, around which Ford's moves would leave the province with neither a strategy for reducing emissions or a means of identifying and supporting the changes to infrastructure and public services needed to deal with the already apparent impacts of a changing climate. The costs of these impacts are already estimated in the hundreds of millions per year, and will move into the billions over the coming decades. In more immediate terms, the direct costs of extracting Ontario from the cap and trade system could run into the billions themselves.
On the electricity file, the Pickering life extension, and the Darlington and Bruce nuclear power plant refurbishments, were highlighted in the previous government's energy strategy as key drivers of future electricity rate increases. That is to say nothing of the costs of dealing with the millions of bundles of additional, highly-radioactive waste nuclear fuel that will be generated by these refurbished plants. The waste fuel will require safe management over time scales measured in hundreds of thousands of years.
The effective abandonment of efforts at energy efficiency and investments in technologies crucial to low-carbon energy transitions will leave Ontario at a competitive disadvantage relative to competing U.S. states and other jurisdictions in Europe and Asia. All are continuing to make major investments in these areas.