February 24, 2016 1:40 pm
Updated: February 24, 2016 4:55 pm

Wynne says cap-and-trade plan will add about 4.3 cents a litre to gas prices

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TORONTO – Motorists and most homeowners in Ontario will be among those to feel the first effects of the Liberal government’s cap-and-trade plan, paying more for gasoline and natural gas.

Premier Kathleen Wynne revealed some of the impacts on consumers Wednesday, such as an increase of about 4.3 cents a litre on gas and about $5 more per month on residential natural gas, before the legislation enabling cap-and-trade was to be introduced.

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“The cost of doing nothing is much, much higher than the cost of going forward and reducing greenhouse gas emissions,” she said.

More details are expected to come Thursday as the government tables its budget, but the government indicated Wednesday that some large polluters will be given temporary allowances.

Revenue from the cap-and-trade auction set for next year will be used to “protect” consumers from an electricity rate hike and could even lead to rates going down, Wynne said, adding she expects the program won’t increase electricity costs for the industrial and commercial sectors.

Retrofitting and conservation programs could also be used to offset increases in natural gas bills, she said.

Environment Minister Glen Murray predicted that drivers wouldn’t notice much of a change in gas prices, since they already fluctuate.

“In my (downtown Toronto) constituency, and I don’t have a big constituency, the difference in gas prices between one station and another is greater than any change that’s going to occur as a result of cap and trade,” he said.

Green Party of Ontario leader Mike Schreiner said large emitters should not be given a “free ride” through temporary relief as cap-and-trade is implemented.

READ MORE: Ontario projects 2015-2016 deficit will be $7.5 billion, $1 billion under estimate

But Murray said it’s necessary to protect Ontario jobs in industries that are competing with jurisdictions without a carbon pricing system. About 14 per cent of industries will get allowances, he said.

“We know that the people getting reductions or getting assistance through this program are legitimately trade exposed and are legitimately making reductions and need that protection,” Murray said.

NDP Leader Andrea Horwath supports cap-and-trade but said it’s “worrisome” big polluters are getting “a bit of a pass.”

Cap and trade is scheduled to take effect in January and the government expects to raise about $1.3 billion in its first full year of operation, money that will be devoted to lowering greenhouse gas emissions.

Finance Minister Charles Sousa denied Wednesday that cap-and-trade revenue would be used to lower the $7.5-billion deficit, which the Liberals have promised to eliminate by 2017-18.

However, the revenues still have to show up on the government’s balance sheet.

Progressive Conservative Vic Fedeli believes cap-and-trade revenue will be used to show a lower deficit, similar to the accounting for revenue from a Hydro One IPO, even though both are dedicated for specific funds for climate change initiatives and infrastructure projects.

The fall economic statement showed a 2015-16 deficit projection that was $1 billion lower than was forecast in last year’s budget – much of the revenue boost was due to IPO revenue on the books, but Sousa denied it was being used to lower the deficit.

 

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