Ontario’s Wynne to Expand Green Push With Ambitious Climate Plan

  • Province to unveil C$7 billion incentive package, reports say
  • Electric-vehicle subsidies said to be among measures

Premier Kathleen Wynne will unveil the next step of Ontario’s climate plan Wednesday, which is said to include a series of incentives to cut emissions from vehicles and buildings.

Canada’s most populous province will introduce a multi-year, as much as C$8.3 billion ($6.5 billion) Climate Change Action Plan, according to media reports. The move comes as Ontario prepares to roll out a cap-and-trade program forecast to raise C$1.9 billion annually, and after phasing coal power out entirely over a decade while sparking warnings of dwindling competitiveness.

The green push is a cornerstone of Wynne’s Liberal government as a sluggish manufacturing rebound, government asset sales and rising debt make Ontario the most indebted sub-sovereign government in the world as rated by Moody’s. Wynne, who projects a balanced budget in the 2017-2018 fiscal year, says climate spending is a necessity.

Erik Hertzberg/Bloomberg

“We share the conviction that Canadians are fully capable of leading in a global economy disrupted by innovation and transitioning to zero emissions,” Wynne said Tuesday night in a speech to the C.D. Howe Institute. “But seizing that opportunity is too important to be left to chance.”

Climate Plan

Wynne will unveil her latest steps Wednesday in Toronto. The measures call for between C$5.9 billion and C$8.3 billion in government spending, a Canadian Press report Tuesday said. The package will include electric vehicle subsidies, funding for vehicle charging grids, funding for home, business and public sector energy retrofitting, new transit funding and incentives to reduce natural gas in home heating, the Globe and Mail newspaper reported in May, citing a draft copy of the plan. The 28 key measures in the plan include a call for all new homes to be net zero carbon homes by 2030, the Toronto Star reported on Tuesday. The reports suggested a term or four or five years.

Ontario was long Canada’s economic engine, though its manufacturing sector was hit hard in the 2008-2009 financial crisis. As Canada’s oil-producing regions have been shaken by a commodities slump, Canada’s dollar has weakened and Ontario is rebounding.

Manufacturing rose 4.7 percent in March from the previous year, and the province’s economy is forecast to expand by 2.6 percent in 2016, tied with British Columbia for the nation’s highest growth rate, a Bloomberg survey of economists shows. Policy makers are counting on U.S. demand and a weaker Canada dollar to boost non-energy exports, something that would benefit Ontario’s auto sector and other manufacturing.

Ontario’s unemployment rate has inched upward over the past year, though at 7.0 percent still remains slightly below the national average of 7.1 percent.

Soaring Rates

Wynne says it’s “categorically false” that her climate plan will ban natural gas home heating. A spokeswoman for Canada’s largest gas provider, Enbridge Inc., declined to comment Tuesday ahead of the plan’s release. Ontario has already seen electricity rates soar in a bid to boost environmental performance, and critics fear the cost impact of restrictions on home heating.

“We believe when it comes to natural gas, there is a hidden agenda and it is going to be hurtful to families and businesses in this province,” John Yakabuski, a lawmaker from the opposition Progressive Conservatives, told reporters Tuesday. The new regulations will also make homes more expensive, he said, and the housing market in Ontario’s capital of Toronto is one of two the federal government is trying to temper. 

Carbon Price

Ontario is launching a cap-and-trade emissions reduction program in 2017 that Wynne projects will raise C$1.9 billion annually and be reinvested in “green projects.” Ontario will eventually link its carbon market with Quebec and California.

Canada’s four most populous provinces -- representing 86 percent of the country’s population -- now have, or are introducing, either a carbon tax or a cap-and-trade program aimed at reducing emissions. Prime Minister Justin Trudeau’s government is pressing for a more co-ordinated national emissions reduction effort, and has sidestepped questions of whether he would unilaterally impose a minimum national carbon price amid opposition from some provinces. Wynne said this month she didn’t expect him to.

Ontario closed its final coal plant in 2014, a move that has led both to a drop in levels of certain toxic greenhouse gases -- like nitrogen dioxide and sulfur dioxide -- and increased power costs. Ontario’s base power rate last month was 2.5 times the rate of a decade earlier, with the Ontario Chamber of Commerce having warned the prices are hurting private sector growth and hiring.

Before it's here, it's on the Bloomberg Terminal.