Dalton McGuinty: ex-premier “Dad” is still preaching

A shorter version of this article appeared in The Financial Post on March 7, 2019.

Mr. McGuinty’s energy policies brought higher electricity bills and industrialized rural communities with wind turbines–not everyone was happy.

Dalton McGuinty is back, but did he ever really go away?

Former Ontario Premier, Dalton McGuinty has recently reappeared in public. He has launched a university lecture tour with the theme “Climate Change: Can We Win This? Be Honest”. He has already addressed audiences at University of Toronto, Queens and more recently at the University of Windsor. He is scheduled to appear at Western University in March.

Having resigned in disgrace as Ontario’s Premier in October 2012 due to the gas plant scandal, McGuinty has kept a very low profile since. Perhaps he now feels Ontarians have forgotten not only that affair but all the other bad policies he brought us. Those other policies included the promise of no tax increase which was followed by the imposition of a health tax, the Green Energy and Green Economy Act (GEA), which resulted in Ontario having the highest electricity prices in Canada and a doubling of Ontario’s debt. There were others.

McGuinty was recently honoured by a Liberal colleague, Ottawa Mayor, Jim Watson who promised him the “key to the city” in 2019. Mayor Watson of course held various cabinet positions in the McGuinty government before abandoning the ship to return to Ottawa.

Mr. McGuinty’s seminars demonstrate he is still a firm believer in “climate change” and is convinced he and the province’s taxpayers should do more. In a CTV Windsor news report, he is quoted as saying that while current Premier Doug Ford is fighting the carbon tax,: “we should embrace it” because “it is the most effective and efficient way to demonstrate a commitment to addressing climate change”.

He must view taxpayers as bottomless pits with surplus cash.

Not only has McGuinty re-entered public view, he has also accepted appointments as a director to several corporations. He is on the Boards of Innergex Renewable Energy Inc, Pomerleau Inc., and Electrovaya Inc. He also became a lobbyist for Desire2Learn as well as being appointed “a special advisor”.

The latter two companies; Desire2Learn and Electrovaya both received substantial Government of Ontario grants during McGuinty’s time in office as the Premier. Desire2Learn were awarded a $4.25 Million Grant from the Government of Ontario in January 2011 and Ekectrovaya received their $17 million dollar Grant in August 2009. Desire2Learn also received $3 million from the education ministry. In 2014 McGuinty was caught red-handed trying to lobby on behalf of Desie2Learn to certain members of the Wynne led government and was forced to register as a lobbyist.

While Innergex Renewable Energy Inc. is a Canadian company it is headquartered in Montreal and depends on Ontario for only 6% of its revenue. Its asset base in Ontario consists of one solar generation unit of  33.2 MW and three small hydro generation units totaling 36 MW. Its unclear what Ontario’s former premier brings to their Board of directors unless they were seeking a politician of his ilk.

Pomerleau Inc is a private Quebec headquartered civil works and building company and it appears McGuinty joined them as a member of their Board of Directors in the early part of 2016. They have been quite successful at winning contracts in Ontario including those with Provincial funding. A large waste water treatment plant in Kingston was one such win. A report to Kingston Council October 5, 2010 contained the following: “The funded portion, as per the agreement, was reviewed with respect to the award of contract to Pomerleau Ontario Inc. and was considered to fairly represent the defined works. The total projected budget for the engineering and construction remains within the $116,325,000 approved budget envelope, which includes electrical co-generation, on-site biosolids storage, staff costs and allowances for furnishings and equipment to be purchased outside the construction contract.” And: “In June 2005, the Province of Ontario announced project funding of $25,000,000.”

There are more interesting connections: former Mayor of Kingston, John Gerretsen, who served in the McGuinty Cabinet and Gerretsen’s son was Kingston’s Mayor from 2010-2014 and is now an MP In the Justin Trudeau Liberal government. Pomerleau is working with SNC-Lavalin and other companies on the first “Infrastructure Bank” investment in respect to the $6.3 billion Montreal REM project. As reported, “Construction on the project is already underway. SNC-Lavalin, Dragados Canada, Inc., Aecon Group Inc., Pomerleau Inc. and EBC Inc. were all part of the winning consortium and broke ground on the project in April.” As the SNC-Lavalin Federal controversy unfolds it will be interesting to see what eventually happens to this project.

On April 7, 2017 Dalton McGuinty, joined the Electrovaya Board of Directors. At that time Electrovaya was being investigated by the Ontario Securities Commission (OSC). In the OSC Proceedings one finds the following: “Between May and September 2016, Electrovaya issued five news releases that announced significant new business relationships in unbalanced terms. Electrovaya also did not disclose in its MD&A that revenue estimates announced in two previously announced commercial arrangements would not be realized.”

Just over two months later the OSC reached an agreement requiring Electrovaya Inc.’s CEO to pay a $250K penalty over OSC disclosure violations as noted in the Financial Post on June 30, 2017. Is it possible Electrovaya’s new Board Member played a role in getting their CEO and the OSC to reach that agreement?

Clearly Mr. McGuinty has value to those companies he handed out grants to, and perhaps they saw the value he could add to their business if appointed as a member of their board or as an “advisor”. One might assume he is being rewarded monetarily for both his board/advisory positions and for those speaking engagements. The former appears to be the case as the December 31, 2017 Annual Information Form for Innergex Renewable Energy discloses that Mr. McGuinty is the holder of 8,505 Deferred Share Units with a current value of approximately $121,000.

Mr. McGuinty is presenting himself to the younger generation and university audiences as a father and grandfather who is simply interested in preserving the environment and influencing positive climate change. Many Ontarians however, will recognize him for the damage his Premiership created both in terms of making the province the most indebted sub-national government in the world as well as the province decimated with industrial wind turbines and solar panels causing electricity prices to be among the highest in North America.

PARKER GALLANT

 

P.S. The resignation of Gerald Butts from the PMO February 18, 2019 is noteworthy also for his role in both getting the Ontario Liberals elected in 2003 and for setting their policies: “Butts largely wrote the platform McGuinty successfully campaigned on during the 2003 Ontario election. It contained more than 100 promises, including pledges to cancel proposed tax cuts and increase social spending. It was also heavy on environmental protection: McGuinty promised incentives for renewable energy, and to phase out Ontario’s coal-fired power plants.”

 

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What (and who) is the Ecofiscal Commission (Part III)?

People in Ontario have seen some of this before … it didn’t end well

Part one in this series dealt with the creation of the Ecofiscal Commission and had a short review of its commissioners (economists), advisors and funders. Part Two looked at the Chris Ragan/TVO interview with Steve Paikin and several of the claims made by Mr. Ragan, Chair of the Commission.

Today, I deal with the significant influence the Ecofiscal Commission and its economists/commissioners have had in respect to the Pan-Canadian Framework and various government documents created in support of “pricing carbon pollution”.  The Pan-Canadian Framework gives special mention to “Canada’s Ecofiscal Commission” in a call-out on page 7: “Carbon pricing is the most practical and cost‑effective way to lower GHG emissions while encouraging low‑carbon innovation — Canada’s Ecofiscal Commission”.  The only other non-government credit handed out is to the World Bank.  That alone speaks volumes about Ecofiscal’s influence!

Chris Ragan’s influence was obvious in his appearance at the Standing Committee on Environment and Sustainable Development November 1, 2018 where he dazzled them! In his presentation he suggested: “The proposed federal backstop is also a quite well-designed policy,” and went on to say: “there are two main challenges that you need to address. One is the impact on business competitiveness. The second is the impact on household purchasing power.” He also claimed “you can however, design policies in a way that address those challenges head-on” and “This is the output-based pricing element of the federal backstop”.

(Mr. Ragan’s views on this echo what Ontarians were told when the Green Energy and Economy Act was presented. Consumers, both residential and businesses, would become innovative in order to reduce the use of electricity. We know how that worked out!)

The questions posed to Ragan were gentle and he handled them with conviction. Ragan answered one question by saying: “I am not an expert on the number of tonnes we have to go, basically because that’s not our focus.” Huh?

One of the issues ignored by the media in respect to the Pan-Canadian Framework is how it is really more than just “pricing carbon pollution” via the carbon tax. It also established “clean fuel standards” which “would promote the use of clean technology and lower carbon fuels, and promote alternatives such as electricity, biogas, and hydrogen.”  Additionally, the federal government will establish a “methane regulation” and “energy efficiency/building code amendments”.  Along with that array of additional costs for businesses and households in Canada, the government would be able to purchase foreign “carbon offsets” using our tax dollars.  In effect, the Pan-Canadian Framework adopted by the First Ministers of the 10 provinces and three territories on March 3, 2016, referred to as the “Vancouver Declaration on Clean Growth and Climate Change,” created as many as five ways Canada’s taxpayers and businesses will be hit with costs.

On October 3, 2016, Environment and Climate Change Canada issued a press release containing a quote from Minister McKenna stating: “Pricing pollution is one of the most efficient ways to reduce greenhouse gas emissions and to stimulate innovation. Already 80 percent of Canadians live in a province where there is pollution pricing. We want to continue this trend and cover the final 20 percent.”

As most people now know, that 80 percent has fallen significantly with the election of the Ford government in Ontario and is likely to fall further pending the outcome of the upcoming Alberta election.

Needless to say, the Environment and Climate Change Ministry put out several documents to augment their views and the wonders of “pollution pricing” in driving down emissions. One of those documents was referenced as “Estimated impacts of the Federal Carbon Pollution Pricing System”.  Canada’s Ecofiscal Commission is touted for its recommendations and is cited three times in the “Endnotes”. 

One of the ENGOs, the Pembina Institute, also gets two nods in the Endnotes, one of which states:

“Pollution from coal power plants results in health issues that cost the health care system over $800 million annually, according to a study performed by the Pembina Institute in 2014.” Now in yet another Pembina Report a year earlier they had this claim: “According to the analysis, climate change impacts from coal-fired power range from $1.1 to 4.5 billion annually.”

Pick a number, any number, seems to be the theme, so politicians and ministry officials apparently do nothing to confirm what they are told!

The Ecofiscal Commission is also to be an intervenor in the Ontario Court of Appeal in respect to “the matter dealing with the Greenhouse Gas Pollution Pricing Act (GGPPA)”. Their “Factum” was handled by none other than Stewart Elgie, a professor of law and economics at the University of Ottawa, and director of the University’s interdisciplinary Environment Institute and founder of Ecojustice. The latter is also scheduled to be an intervenor. The factum clearly indicates Ecofiscal’s support for the Federal carbon tax and makes this assertion under 12 (a) of the factum: “The use of price-based regulation minimizes the costs to provincial economies — saving an estimated $70 billion per year across Canada, compared to prescriptive regulations, based on the CEC’s economic modeling.”

The suggested $70 billion seems like a stretch but perhaps as the bulk of the commissioners in Ecofiscal are quasi-government employees perhaps they are confident that the annual costs would be 225% more than the combined 2018 budgets of both Saskatchewan and Manitoba. Perhaps they are trying to make the case that by 2022 the carbon tax priced at $50/tonne will only extract $35 billion (based on Canada’s 2016 emissions of 704,000 tonnes). Their argument apparently is that we would be saving $35 billion annually by simply accepting their “economic modeling.” As a former banker, I have trouble buying into their suggestion.

As an Ontarian, It is hard for me to believe this is anything more than our experience from the creation of the Green Energy and Green Economy Act (GEA). It even includes some of the players involved in that fiasco via the GEAA (Green Energy Act Alliance) whose goal was: “to make Ontario a global leader in clean, renewable energy and conservation, creating thousands of jobs, economic prosperity, energy security, and climate protection.” The GEAA basically wrote the GEA for the McGuinty government.

We all know how that turned out!

PARKER GALLANT

Who (and what) is the Ecofiscal Commission? Part II

A closer look at one of the commissioners’ claims

As noted in “Part One” of this series, the Ecofiscal Commission’s Chair, Chris Ragan, was interviewed on the Agenda by Steve Paikin in respect to the push for a carbon tax. The program title was “Losing Ground on Carbon Pricing” which, according to Ragan, shouldn’t happen, so he sprinkled his parsimonious answers with selected information that omitted facts.

The following highlights a few questions posed and Ragan’s answers. Please note for brevity’s sake I have only included the main thrust of the question and the pertinent part of the response.

  1. Are you losing ground in the battle for public opinion?
  2. I think on one side of the debate there is not very good information, maybe even misinformation in some cases. I think the other side really doesn’t want to debate or explain.

It appears Commissioner Ragan is satisfied the science is settled despite some “good information” from the “other side” such as, “There are several claims that large numbers of scientists do not agree with the theory of climate change, the best known of which is a petition organized by the Oregon Institute of Science and Medicine (the OISM petition). This petition now appears to be signed by over 32,000 people with a BSc or higher qualification.” Is it Mr. Ragan who suffers from “misinformation”?

  1. Is carbon pricing really a necessary tool to fight climate change?
  2. A. I would argue carbon pricing does work. I think the evidence, whether its from British Columbia or the UK or other countries that have introduced these, including, and the State of California, carbon pricing does reduce emissions.

Let’s examine Mr. Ragan’s claims:

British Columbia:                                                                                                                                                       Mr. Ragan’s arguments in respect to British Columbia are a big stretch.

B.C.’s Carbon Footprint Grows as a very recent article suggests: “The carbon footprint of British Columbia is growing and has been growing for the last eight years despite a strong environmentalist lobby, the latest provincial government data suggests.” The article goes on to state: “British Columbia had a target of cutting carbon emissions by 33 percent from 2007 levels to 2020. However, the new figures reveal the province has only succeeded in cutting emissions by 2.2 percent from 2007 levels, which means the 2020 target will be pretty much unattainable unless a radical change in driving habits takes place.” Transportation is a major emitter in BC and a recent announcement by the NDP/Green government recently stated: “By 2040, all new light-duty car and truck sales in British Columbia will be zero-emission vehicles (ZEV).” B.C. has the highest per capita rate of EV in the county with 12,000 registered, representing a penetration rate of less than 1/2 % according to Statcan.

California:                                                                                                                                                                     The foregoing is not much different if one looks at the State of California where an article from six months ago suggested: “Emissions from cars and other light-duty vehicles in 2016 hovered near the 2008 level of 118 million metric tons of carbon dioxide or its equivalent. Truck emissions continued to decline at a rate insufficient to make up for the added tailpipe pollution.”

If one goes further and examines other events in California one notes from an article in the SF Chronicle: “solar electricity generation, both from rooftop arrays and large power plants, grew 33 percent in 2016, according to the air board. Imports of hydroelectric power jumped 39 percent as rains returned to the West following years of drought.” So, importing hydro power allows California to claim they are reducing emissions while transportation emissions have remained at or near 2008 levels. In California’s case if one also looks at electricity prices it is interesting to compare electricity prices and note: San Francisco residential electricity prices were 27.95 cents/kwh versus 7.13 cents/kwh in Quebec.

Another important fact; California imports about a quarter of its electricity on average and much of that is emissions-free hydro. This is not information Economist/Commissioner Ragan brandishes as it flies in the face of his claims. The Chronicle article notes: “And while California has aggressively supported electric cars, only about 200,000 are registered in the state. “We have not made progress on transportation,” Borenstein said. “We’ve made negative progress.” In contrast, efforts to slash emissions from power plants have been far more successful, and are running well ahead of schedule.” As of December 31, 2017 there were 25,467,663 automobiles registered in California so EV represented less than 1% of all automobiles registered in the state.

UK:                                                                                                                                                                                          If one quickly glances at the UK statistics on emission reduction it appears they have been successful at leading the way amongst most European countries.  On closer examination however much of their achievements can be attributed to either reducing coal generation, adding gas plants or converting some coal plants to biomass. The Drax Power Station is one large example of the latter.  “Drax Power Station is the biggest renewable generator in the UK and the largest decarbonization project in Europe.” “It has a capacity of 3,906 megawatts (MW) and produces around 20 terawatt-hours (TWh) of power a year, 65% or more using compressed wood pellets, a form of sustainably sourced biomass. The remainder is produced using coal, a fossil fuel being phased out by 2025.” And “Drax Power Station supplies 6% of the country’s electricity needs, including 11% of its renewable power. Four of its six power generation units have been upgraded from burning coal to use biomass.” An article from 2014 by the writer examined the conversion process to biomass and the eventual consumption of wood pellets (7 million tons annually) produced in the southern US and elsewhere and shipped to a port in the UK for destination to the DRAX Power Station. The energy created will generate emissions 150% of a coal plant and 300% of a gas plant but are classified as “renewable” energy. That means each megawatt hour created will generate a “carbon credit” to be sold via the ETS (European Emission Trading Scheme). It’s a “double whammy” counted towards reducing emissions.

The electricity generating sector has been a driver in reducing UK emissions. In a report for 2017 year-end from the UK government they note: “Reductions in carbon dioxide emissions in the energy supply sector down 7.6 per cent (8.7 MtCO2e) driven by a decrease in power station emissions. The main reason for this fall is the switch in the fuel mix for electricity generation from coal and gas to renewables.“

It appears the “evidence” offered by Mr. Ragan is not factually related to carbon pricing — unless he views the UK’s biomass generation as representing an event caused by “carbon pricing” and not from “carbon credits” for a plant now generating 50% more emissions than when operating as a coal plant!

 

  1. If you’re are taking with this hand and giving back with this hand and it’s a wash, why would I change my behaviour?
  2. Because it’s not a wash at the end of the day in terms of what you do. It’s a wash in terms of your purchasing power. The whole logic is to maintain your purchasing power but because gasoline and other carbon-intensive things are now more expensive you do things differently. [Ragan goes on to say] It’s their choice and that flexibility is the key for why carbon price is the lowest cost way.

What economist/commissioner Ragan doesn’t say is the obvious. Ragan suggests the plan should be to return all of the “carbon tax” so we can change our purchasing habits. The plan announced by the federal government suggests 80% of households will receive rebates in excess of their cost.  The question becomes: will they use the slight excess to trade in their automobile for an EV or change their gas furnace to one consuming wood pellets?  Unlikely on both counts, as the excess received, as an example, in Ontario in 2022 when the carbon tax is $50/tonne the excess per household will be $133.00 for the full year.  Most of that excess will be paid back to the government via the sales taxes applied to both the gasoline we use for our cars and the natural gas we use to heat our homes*.  Households will see the cost of all consumption rise as food, services, toiletries, etc. etc. will increase based on carbon taxes charged to the raw material/assemblers/transporters of those products/services.   By 2022, when the $50/tonne is in place the cost to Ontario’s households and businesses will be in excess of $8 billion based on 2016 provincial emissions of 161 MT but the amount returned to households will be about half that amount.

  1. What about subsidizing fossil fuels, what we do to the tune of $1 billion per year?
  2. We as a country do not have explicit fossil fuel subsidies.

Finally, Ragan provides one honest answer!

PARKER GALLANT

Coming tomorrow: Part 3 will look at the influence the Ecofiscal Commission had in the creation of the Carbon Tax.

*Over 6 million Canadian (43%) households heat their homes with natural gas.

Who (and what) is the Ecofiscal Commission?

It recently came to light that when Canadian universities hand out doctorates thus allowing an individual to be called an “economist,” some recipients feel they can also call themselves “Commissioners” with attendant heightened gravitas.

For example, if you examine the “Ecofiscal Commission” the 13 economists are listed as “commissioners”. If you thought a “Commission”* as it relates to Canada is normally appointed by the legislature of the country or the province, you are apparently wrong.  In the spirit of appointing themselves as “commissioners” they also created the word “ecofiscal” proposing a its definition as follows:

An ecofiscal policy corrects market price signals to encourage the economic activities we do want (job creation, investment, and innovation) while reducing those we don’t want (greenhouse gas emissions and the pollution of our land, air, and water).

Reviewing the bios of the 13 commissioners is an interesting exercise: not one seems to have spent any meaningful time working in the private sector. They are all university professors or engaged as government employees — only one appears to have actually worked for a short time outside of a government position not paid for by taxpayers.

The Liberal Party of Canada (LPC) likes “commissions” : “Indigenous Peoples Commission”, “Young Liberals of Canada”, “National Women’s Liberal Commission” and the “Senior Liberal’s Commission”.  Presumably they were also simply created without legislative involvement?

My interest in Canada’s Ecofiscal Commission was triggered by an interview on the “Agenda” that Steve Paikin had with Chris Ragan, Chair, Canada’s Ecofiscal Commission, and specifically the claims made by him when responding to Paikin’s questions.  The interview title was “The Battle Over Carbon Pricing” and Ragan was effective at simply walking over any of the questions posed by Paikin, providing superficial answers as if they were facts. “Commissioner” Ragan’s purpose in life seems to be to support “carbon pricing” come hell or high water!  He, his fellow commissioners and the assembled team of “Advisors” believe the science is settled and Canada, along with a few other countries, will solve the AGW/climate change/pollution (pick one) problems plaguing the world due to human consumption.

Perhaps the 13 economists/commissioners lack confidence, otherwise why would they also need 15 “Advisors” composed of representatives from the NDP (Michael Harcourt, former BC Premier), the Liberals (Paul Martin, former PM) and the Reform/Conservative Party (Preston Manning, former Leader of the Opposition) and Jim Dinning (former Alberta Treasury Minister)! The other 12 “Advisors” come from industry such as GE Canada, Mattamy Homes, TD Bank and even Suncor Energy. Sprinkled in are others with a decidedly biased view on how to save the world from global warming.  The latter include individuals like Bruce Lourie (Ivey Foundation) and Peter Robinson (former CEO of the David Suzuki Foundation).

On top of all those economists/commissioners and advisors the Ecofiscal Commission also has nine permanent staff, most of whom were drawn from the public sector.

I am unsure as to how the “Commission” survives and pays staff as it doesn’t appear to have charitable status, nor does it solicit funds via their website. It also doesn’t appear they receive funding from either the federal or provincial governments.  They do, however, thank their funders in their abbreviated and unaudited “annual reports”. The 2017 annual report (day and month not disclosed) suggest they received and spent $1.3 million with 7% ($91K) spent on “contract research.” The latter seems to be a very small amount to reach the conclusions they claim and publicize, but perhaps they are of the view that the “science is settled” and therefore their role now is to convince the masses.  That goal was noted in the Chair’s letter in the annual report which stated: “Meanwhile, as governments at every level recognize the benefits of ecofiscal instruments, we piloted a series of workshops for public servants on the practical details of designing good ecofiscal policies.”

The “Funders” consist of eight charity foundations and three corporate funders with the latter being TD Bank, Suncor Energy and KTG Public Affairs Partners, formed in 2013 by two former Liberal insiders and one NDP insider. Clicks on the TD logo and you are taken to TD’s “corporate giving” site; click on the Suncor logo you are taken to Suncor Energy Foundation. The eight charitable foundations have total assets of $1.3 billion*** and use their annual earnings to dole the funds out to apparently worthy causes. One of them, the Peter Gilgan Foundation however, seems to operate by disbursing almost all of the funds received annually by the charity. Peter Gilgan, an Ecofiscal “advisor,” is the founder and CEO of Mattamy Homes which claims to be the largest privately-owned home builder in North America. Interestingly enough all eight are members of Canadian Environmental Grantmakers Network (CEGN)! CEGN was created by another “advisor,” namely, Bruce Lourie, President of the Ivey Foundation and a past Board member of the Trillium Foundation, the Ontario Power Authority and former Chair of Environmental Defence Canada. In addition, two of the corporate members of CEGN are Suncor Energy Foundation and TD Friends of the Environment Foundation. (It should be noted Mr. Lourie together with Rick Smith, former CEO of Environmental Defence, are also two-time winners of the prestigious Financial Post’s “Rubber Duckies” award!)

It’s obvious the economists/commissioners, advisors and funders of Canada’s Ecofiscal Commissioner are firm believers in climate change and represent a major force in supporting those beliefs.  They seem willing to cause great pain to Canadian families through advocating for a carbon tax despite questions about the effectiveness of such a tax, and Canada’s role in global warming generally.  Imposing a carbon tax in Canada while countries representing 86% of global emissions do nothing, will make Canada un-competitive and reflect in lost jobs and considerable harm to low-income families.

 

PARKER GALLANT

 

Coming soon: Part two, an exploration of the Agenda interview with Chris Randal, Chief Commissioner of Ecofiscal.

*The Federal Government has had a Commissioner of the Environment and Sustainable Development dating back to at least 2002.

**Merriam Webster’s definition of “economist” is simply; “one who practices economy”.

***Based on the writer’s review of the latest financial statements filed by the eight foundations on the CRA “charities” site.

 

Canada’s government wants us to pay for our GHG emissions … and everybody else’s, too

From today’s Financial Post, another look at Canada’s emissions, and again, wondering why our government portrays us as the environmental bad guys?

Early in my banking career in a discussion about statistics I was told an old joke that rang true enough that it stayed with me. The story goes like this: An interview for a job opening attracted a mathematician, a statistician and an economist. The employer asks them each to calculate the answer to two plus two. The mathematician says four. The statistician, after studying it for an hour, declared the answer to be somewhere between three and five. And several hours later, the economist raises his hand to ask: What answer would you prefer?

The joke explains why it’s so interesting to examine economic data presented in isolation of other related data. For example: the popular manner to present data related to GHG (greenhouse gas) emissions is via “per capita” output, but a better measure would calculate GHG emissions against the economic output of the country. The reason is that the impact on emissions is affected by a country’s population density, its climate and its trade (especially exports) all of which have an effect on GHG emissions.

As one example, the new NAFTA (or USMCA) is a trade deal between Canada, with a population density of four people per square mile; Mexico, with 57 people per square mile; and the U.S., with 92 people per square mile. Obviously, density per square mile will have a direct impact on GHG emissions, and the ability to get products to business and consumer markets, be they imported or exported or produced locally. Similarly, each country’s climate will impact GHG emissions. Canada is much colder than either Mexico or the U.S. It’s why Canadians who can afford it head south in the winter, while the rest of us stay home and try to stay warm by generating GHG emissions.

Canada’s GDP in 2017 was $1.653 trillion and our international trade saw us export $549.6 billion or 33.2 per cent of our GDP. We imported $573.6 billion, leaving us with a trade deficit of $24 billion. Our largest exports were “energy products,” totaling $94.8 billion, mainly crude oil and crude bitumen.

Natural Resources Canada notes of Canada’s crude oil production: “GHG emissions per barrel of oil produced in the oilsands have fallen 29 per cent since 2000” and “Canada is the fourth largest producer and fourth largest exporter of oil in the world.” It also notes that the oilsands emit about 60 megatonnes of GHGs per year. That’s 8.5 per cent of Canada’s total emissions and 0.13 per cent of annual global emissions. Eighty per cent of the emissions in a barrel of Canadian oil are emitted by the end user — almost all of it outside of Canada.

Now, if one examines GHG emissions of Middle Eastern oil-producing countries such as Saudi Arabia, UAE, Kuwait, Qatar and Oman, one finds they emit more GHGs “per capita” than Canada — and way more GHG emissions per $1,000 of GDP.

In 2017 Canada exported $444.9 billion to its biggest markets: NAFTA and China (comprising 81 per cent of all Canadian exports). Those exports generated GHG emissions of 301 kilograms per $1,000 of GDP, totaling approximately 133,915 kilotons.

Our imports from the U.S., Mexico and China amounted to $414.5 billion and represented about 181,386 kilotons of GHG emissions produced in those three countries. So, despite importing $30.4 billion less from the U.S., Mexico and China, the GHGs that those countries produced to make goods imported by Canada was around 47,471 kilotons higher than the GHGs Canada produced to export goods to those three countries — exports of which oil made up the largest share, and exports that were actually worth more in total value than the higher-emitting imports.

Despite this, Prime Minister Justin Trudeau and Minister of the Environment Catherine McKenna want to hit all Canadians with a carbon tax. In effect, they want us to pay for our trading partners’ emissions as well as our own. But if we really wanted to contribute to a global reduction in GHGs, perhaps the better way would be to build a pipeline or two in order to get our low-emission crude to foreign markets. That would generate good jobs and tax revenue for Canada while reducing global emissions. Who knows? It might even help balance the federal balance the federal budget.

Parker Gallant is a retired bank executive.

 

What are the indirect costs of the Trudeau government carbon tax?

Families should plan now for their carbon tax — er, “pollution tax” rebate.  You might soon be told you’ll need sweaters as part of a climate action plan.

[Photo: Dan Gold]
Trying to determine exactly what the federal Liberal government is doing with their plan to tax “pollution” via a carbon tax is an exercise in total frustration. The recent announcement from Prime Minister Justin Trudeau promised taxpayers in the four* provinces that said they will not impose a carbon tax, was that he will be hitting them with “a price on pollution that causes climate change from coast to coast to coast”!

He went on to say he would help Canadians adjust to the tax by handing out rebates to 80% of the families in those four provinces and claimed “eight in ten families will get back more than they pay directly”!

What they will pay indirectly is unknown.

Curiosity piqued, I decided to calculate how much that might be.

Emissions by the four provinces total (Source: StatsCan 2016) 273.1 megatonnes so, at $20 per tonne, the “pollution” tax should** generate $5,462 billion (rounded to $5.4 billion).

StatsCan (2015) says there are 6,513,000 households in the four provinces. Trudeau said rebates in the first year to each household would be as follows: Ontario $307, New Brunswick $248, Manitoba $336 and Saskatchewan $598. The total rebates will therefore be around $1.6 billion meaning about $3.4/3.8 billion will be “indirect” *** taxes increasing the cost of other consumption by $522 per household.

So, the “rebate” will represent about 30% of the total “pollution” tax the federal government will levy under the “National Carbon Plan” or NCP. The Prime Minister claims all the funds collected under the NCP will be disbursed to other recipients such as schools, universities, municipalities, hospitals, etc. etc.

Now, forgive me if I engage in wild speculation about the future when Canadian households start to experience the NCPP (National Carbon Poverty Plan). It might be like Ontario households when they experienced the cost of electricity surging over 100% in just 10 years. I suspect we will experience rhetoric similar to that from Ontario’s various energy ministers such as Bob Chiarelli and his “It’s less than a cup of Tim Hortons’ coffee a year,” response to the $1.1 billion cost of the gas plant scandal. Beyond that Energy Minister Chiarelli also linked in to the WWF (World Wildlife Fund)**** when he and other Ontario Liberal Ministers in early 2014 joined WWF to celebrate “National Sweater Day”! The message conveyed was that Ontarians could fight climate change by Putting on a sweater and turning down the thermostat. If every Canadian turned down their thermostat in the winter we could save 2.2 megatonnes of carbon dioxide per year”.

Two years later, after Dianne Saxe was appointed Ontario’s Environmental Commissioner by the Wynne government, she issued her first report to the Ontario Legislature. In it is this statement: “the energy required to heat an existing home can be reduced many different ways (see Figure 1.1), including by:  reducing the target temperature and putting on a sweater”.

What we are liable to see in a few years, should the Justin Trudeau Liberals win a second term is a lot more about sweaters. (It’s already out there: simply Google “Justin Trudeau+sweaters”! The search will get 126,000 hits.)

Maybe Canadian households receiving the rebate in 2019 should resolve now to use the money to immediately purchase one of the many “Trudeau” variety of sweaters available in the marketplace.

PARKER GALLANT

*Manitoba, New Brunswick, Ontario and Saskatchewan.

**Larger companies will be taxed at a lower rate of 80/90% escalating to 100% over time.

***Direct taxes apply to tax on fuel for home heating and for transportation.

****Gerald Butts, senior political advisor to the PM was the CEO of WWF from 2008 to 2012

 

Outrageous: Ontario’s electricity CO 2 reductions cost

January 16, 2017

Ontario Premier Wynne: not to be outdone  (Lucas Oleniuk/Toronto Star via Getty Images)
Ontario Premier Wynne: not to be outdone

Prime Minister Justin Trudeau announced on October 3, 2016 he would put a price on carbon starting in 2018, if the provinces have not put one in place. He also announced the price would start at $10 a ton and rise to $50 per ton by 2022.  As Ontario residents may already know, as of January 1, 2017 the Premier Wynne-led government already moved in that direction imposing a “cap and trade” tax they claim will burden us with a cost of $13 per month via a tax on gasoline and one on our home heating source of natural gas.

This new tax comes on top of one ratepayers in this province should already be aware of as we have been paying for carbon reduction for some time via our electricity bills.

A website providing the Ontario Energy Report states at the bottom it “was first produced in Q3 2014” and uses IESO as its data source.  The quarterly reports contain lots of information; however, they are generally not available until the end of the quarter following the one being reported on.  The reports provide: generation achieved from the TX (transmission connected) market and details on the capacity of both TX and DX (local distributor connected) sectors.  The report is also specific in terms of both exports of surplus electricity and imports and their respective destinations (exports) or sources (imports).  Contained in the 16 pages are many charts and graphs providing information on other facts such as the average hourly electricity price (HOEP), the Global Adjustment (GA) by ratepayer class (A and B), conservation initiatives, etc.

The report also has a graph specific to CO2 emissions from Ontario’s electricity sector starting in 2007 and identifies, by year, the Megatonne (MT) emissions.   If one looks at 2009, which is the year the Green Energy and Green Economy Act (GEA) was passed, total emissions were 16 MT. In 2015 emissions had dropped to 7 MT.  The 7 MT in 2015 were flat measured against 2014’s emissions and, based on results available for the first three quarters of 2016, it appears set to a level that will be around 5.5 MT!  The drop of 10.5 MT since 2009 suggests the Ontario electricity sector reduced CO2 emissions by 10,5 million tons.

How much have Ontario electricity customers paid?

Ontario ratepayers should suspect the foregoing results have been achieved via our electricity bills as they have climbed at multiples of inflation to accommodate renewable energy in the form of wind, solar, biomass, etc.   So, how much have we have paid, and continue to pay, for that achievement, and what does that translate to on a cost per ton basis?

That question can be answered in part by the Ontario Auditor General (Bonnie Lysyk) report of late 2015. That report noted ratepayers paid $37 billion more than necessary from 2006 to 2014 for contracts negotiated by the Ontario Power Authority, and they will pay another $137 billion more by 2032 to satisfy those and other contract obligations through to their expiries.

That brings the cost to $170 billion.

The AG’s report noted wind and solar contracts were estimated to have been paid $9.2 billion over the actual market value, due to prices that failed to reflect the drop in a competitive environment.

So, using the $170 billion to calculate the cost per ton to reduce the 10.5 million tons of CO2 emissions, it appears ratepayers are paying about $16,000 per ton.   Using only the $9.2 billion (wind and solar) the cost per ton of reducing CO2 emissions comes in at over $835 per ton.  The latter cost does not account for the intermittent and unreliable nature of wind and solar which requires back-up from gas plants and easily doubles the costs, raising the emission reduction cost to over $1,600 per ton.

What the ratepayers of Ontario have been paying to reduce emissions in the electricity sector makes the Prime Minister’s upcoming carbon tax of $10 a ton in 2018 and $50 per ton by 2022 look like chump change!

If he really is intent on driving the Canadian economy into the ground, he needs to take a lesson from Ontario’s Premier Wynne and her predecessor, Premier McGuinty.