The Cost of Ending Cap and Trade in Ontario: $3 Billion

Since his election in June, Ontario Premier Doug Ford has promised to end the province's participation in a cap-and-trade agreement with Quebec and California called the Western Climate Initiative.

The provincial government's financial accountability officer responded to that proposal recently with a study that estimates the cost of ending the deal to reach $3 billion over four years, according to an article by Robert Benzie.

"The province’s budget balance worsens because the loss of cap-and-trade revenue from ending the auction of emission allowances is greater than the savings achieved from cancelling cap-and-trade-related spending programs," according to a statement by Ontario Financial Accountability Officer Peter Weltman.

Ford announced in July that the government would rescind the 4.3 cents a litre addition to gas prices included in Ontario's commitment to the cap-and-trade scheme. California and Quebec closed the market to Ontario in June. More recently, Ford promised 'an orderly wind-down of all programs funded out of cap-and-trade carbon tax revenues,' after describing cap-and-trade programs as a "slush fund" and a "cash grab."

The end of the gas surcharge will also mean the end to the "$1.9 billion in annual programs bankrolled by cap-and-trade revenues," reports Benzie, "including subsidies for retrofitting windows and energy-efficient insulation to help consumers reduce hydro and natural gas bills."

Moreover, the province had been exempted from Canadian Prime Minister Justin Trudeau's federal cap-and-trade program. Now Ontario will be forced into that program, unless it wins an expected lawsuit in court.