Ontario carbon cap and trade: guaranteed to have zero impact on carbon emissions

On July 1 2008 I filled up my rental car in Parksville British Columbia, in preparation for a trip to the west coast of Vancouver Island. That gasoline cost upwards of $1.50 a litre, and was the most expensive gasoline I have ever purchased. Part of the cost on that day was a new provincial carbon tax, which had become applicable only hours before.

I thought at the time, especially when I was on my way back from the west coast and the fuel gauge was edging distressingly toward empty and all I could think of was how much it would cost to refill the tank, that the tax might actually work.

The BC carbon tax won immediate accolades from the green crowd, of course. It has been enthusiastically endorsed by academics and even some businessmen; see this Globe and Mail piece from 2014. The BC provincial government congratulated itself, of course, in this summary of the effects of the tax.

But as far as sales of gasoline and diesel are concerned, I really don’t understand what they are cheering about. What effect has it had on retail sales of the two major road transportation fuels?

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Does it look as if the tax had any effect at all on British Columbians’ consumption of gasoline and diesel?

Cut to today, January 17 2017, eight and a half years after BC’s carbon tax came into effect. Ontario, in its never-ending quest to please the same crowd that cheered the BC tax, has embarked on a cap and trade scheme.

The usual crowd has applauded, and unfortunately many of those in the media who cover this issue have steered well clear of the question of whether the new scheme will have any effect at all on emissions of CO2, you know, the stuff that is the target of the scheme.

Here is Ontario energy demand, in realtime, together with the CO2 implications of that energy. Note I said energy demand. You’ll notice something a lot of government leaders and energy/environment commentators seem to forget: not all energy is electricity. It is just one category among three in Ontario, during the daytime never the biggest in any hour, and on cold winter days usually the third-biggest.

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Click on CO2. You will see that no matter what time of day, no matter how many kWhs of electricity demand there are, electricity CO2 emissions are always the smallest. By far.

On that basis we should be heating with electricity, shouldn’t we. All of the current heat demand could, in theory, be met with electricity. No Nobel Prize-worthy science breakthrough would be needed for electricity to provide just about every kWh of heat that is required.

The problem, in practice, is cost. Click on Cost rate. Note how the bars change.

That is why most people do not heat with electricity—unless they have no choice.

Canada’s prime minister recently had an uncomfortable moment out in public with one of those people who has no choice but to heat with electricity: a woman from Peterborough who told him she pays over $1,000 a month for electricity.

She is in penury because of this.

The PM’s answer was to blame the provincial Ontario government, and to remind the woman that the federal carbon tax has yet to kick in—i.e., if she thinks things are bad now, just wait.

I am amazed that nobody brought up the fact that the woman uses the cleanest fuel by far to heat her home. She is actually doing what everybody should do and perhaps what everybody would do if prices had not been jacked up so ridiculously high. She is out on a limb on her own, being financially penalized for living far more cleanly than even our tropical-island-hopping PM who uses a private helicopter, powered with fossil fuel, to hop from one tropical island to the next.

Carbon tax, and cap and trade, is—just like wind and solar—pose and posture at public expense for the benefit of phoney greens who for some perverse reason have gained political influence and mainstream media favour.

It has nothing to do with reducing carbon.

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Al Hunt
6 years ago

First, I must say that I am a supporter of nuclear power and that nuclear is probably the only power source that us humans can use to pull the planet out of a disastrous environmental outcome (because of burning fossil fuel). BC’s population grew by 712,382 from 2000 to 2016 while gasoline consumption remained flat for the same time period. But, according to you, I’m a ‘phony green’ because I support taxes that are designed to curb fossil fuel consumption. You quote the 2008 price for premium gasoline, not regular gasoline and anyone looking at the average prices for gasoline will see that prices have never been as high in BC as in May of 2008 and only for a few days. You picked a very poor time to vacation to Tofino. You have selected a narrow range of statistics to look at to support your opinion. Your selective opinion is exactly the methodology used by fake news websites to spread doubt on true research which is neutral by nature. Oh, I was living in Parksville in 2008 and the high gas prices had a dramatic effect on the driving habits of commuters. You have never seen so many people car-pooling to Nanaimo to get to work. People slowed down, too.

6 years ago
Reply to  Al Hunt

As a pro nuke you are definitely not a phoney green, you are true. My definition of phoney green is mainstream green lobby — every last one of the green NGOs, from Suzuki to Environmental Defence and everything in between.

I have never purchased premium gasoline in my life, and never will. It was regular.

Yes, people slowed down. I was one of them, as I mentioned.

Then the price dropped, and people stopped curbing speed because of gasoline price.

Other than the initial (small) uptick on July 1, the carbon tax did zero to influence movements in the pump price. In BC, people’s driving habits were influenced by the latter when the latter got toward $1.50 and when it backed away from $1.50 their habits were not influenced.

And fake news is … fake news. i.e., made up. Didn’t happen.

Statscan data poured into a chart that illustrates the litres purchased before and after July 1 2008 may be an inconvenient truth, but it’s not fake news.

Ike Bottema
6 years ago

Steve I agree with you on most energy issues but not completely WRT carbon taxes. First though I agree that your main thrust, that being most heating in the province has turned to anything but electricity; namely natural gas, oil, and biofuels (i.e. firewood) . So yes if the government were serious about CO2 reduction, that is obvious low-hanging fruit. Just promote electricity use for heating. I mean we have more supply than demand, right? Just one problem. That same government saddled us with unreliable intermittent renewables! And at costs way out of line with costs from the two mainstays, nuclear and hydro.

So while such an approach makes imminent sense, how can we possibly pay for it? Well that’s where I disagree with your aversion to a carbon tax. Not the complexities of the cap and trade approach being foisted on us. It will end up being just as if not more difficult to administer as our income tax system; having to close off all kinds of loopholes leaving cracks elsewhere that require more mechanisms to plug those those, and so on. I guarantee there will be carbon tax experts that income tax experts!

It seems to me that a more-straightforward fee and dividend approach would work much better. Fossil fuels would be taxed at source so each person pays more for fossil fuels but at the end of the year gets a cheque back of all tax receipts minus admin fees divided by the number of citizens. That approach *directly* rewards anyone being frugal with fossil fuel use.

Now take the example of home heating. Electrical heat suddenly becomes more attractive because there would be little change in electrical rates since Ontario doesn’t use much fossil fuels PLUS at the end of the year those who use electric heating gets a cheque which includes payments made by others who use fossil fuel heating.

In such a scenario it it would be time to consider a heat pump!

6 years ago

Per capita gas and gas sales / GDP sales went down every year except 2015, so showing just the gas sales alone is objectively represents the success of the cap, but not necessarily the effects of the cap. I wonder if the carbon cap is influenced at all by these factors (it should be).