In my latest Greenhouse Gas (GHG) Progress Report I recommend that the Ontario government establish a price on carbon as soon as possible to hasten the transition to a low-carbon economy. This could be done directly through a carbon tax or indirectly through a cap-and-trade system.

Unfortunately, the government recently announced that it would delay implementing a cap-and-trade program beyond 2012 over concerns about negative impacts on the province’s industrial sector and carbon leakage.  The fear that additional costs imposed on emissions-intensive industries by a carbon price will reduce domestic competitiveness and drive firms out of the province has become especially prominent in this period of economic uncertainty.  But if a provincial cap-and-trade program ever gets off the ground regulators will most certainly protect domestic emissions-intensive industries over the short term by providing them with free allowances to reduce or eliminate compliance costs.  Over time it is expected that free allowances would be gradually replaced by auctioned allowances as other jurisdictions move to put a price on carbon.

There are also those who contend that Ontario’s rising electricity costs will cause value-added manufacturing and resource industries to set up shop elsewhere.  “All-in” electricity prices for the industrial end-user, which were estimated at 8.8¢/kWh in 2010 in the Ontario Long Term Energy Plan, are projected to increase to 9.6¢/kWh in 2012. This is more expensive than electricity prices in neighboring coal-intensive U.S. states like Michigan and Ohio, but almost identical to electricity prices in New York State. And, when one considers that Ontario’s corporate taxes and health care costs are lower than neighbouring U.S. jurisdictions, it becomes clear that the province will remain a competitive jurisdiction for manufacturing, particularly if a favourable regulatory environment for next-generation manufacturing industries (including renewable energy) is in place.  I believe that a carbon price is a fundamental element of such a regulatory environment.

Thus, as the Ontario government moves forward with the design and implementation of a carbon pricing program I believe the fear that manufacturing industries will be driven to other jurisdictions should be tempered by the reality that additional costs will be minimized in the short term. Over the long term all jurisdictions will need to impose GHG controls if we are to have any hope of averting catastrophic climate change impacts.  As an early adopter of carbon pricing, the Ontario government will help domestic industries be better prepared for the point in time at which a national or international climate change mitigation policy is agreed upon and the world’s atmosphere and ecosystems are no longer treated as free dumping grounds for global warming pollution.

In my latest Greenhouse Gas (GHG) Progress Report I talk about the potential for soil carbon sequestration as a tool for mitigating climate change. In fact, one of my four recommendations is that “the Ontario government investigate and publicly report on the potential for soil carbon sequestration as a GHG mitigation strategy.”

At the press conference following the release of my report, one member of the media asked why I was recommending a strategy that was costing billions of dollars in Alberta with very little in the way of results to show for all that expense. It was clear that the questioner had confused carbon capture and storage (CCS) with soil carbon sequestration – an understandable mistake given that the former has received a great deal of publicity and the latter practically none.

A World of Difference

Yet there is a world of difference between the two. CCS is a high-tech, high-risk, costly, and as-yet-unproven approach with no co-benefits. Soil carbon sequestration is a low-tech (but quite scientific), low-risk, inexpensive, and proven approach with a myriad of co-benefits.  The table below compares and contrasts these two distinct methods for reducing carbon in the atmosphere.

Will Soil Carbon Sequestration Work?

I’ve used very conservative assumptions in my report. Projecting forward, I think it is reasonable to expect that an enhancement in recommended management practices (RMPs) could result in the sequestration of close to 10 million tonnes (Mt) of CO₂ per year by 2020. It’s an exciting opportunity and I look forward to the government’s response to my recommendation to investigate and report on soil carbon sequestration’s potential in more detail.

Resources:

For more detailed information on CCS, see the Pembina Institute’s Canadian Primer on the subject at http://pubs.pembina.org/reports/CCS_Primer_Final_Nov15_05.pdf)

For more detailed information on Soil Carbon Sequestration, see the Ohio State University’s Extension Factsheet entitled Soil Carbon Sequestration – Fundamentals, at

http://www.envirothon.org/pdf/CG/carbon_sequestration.pdf

In my Annual Energy Conservation Progress Report – 2010 (Volume One): Managing a Complex Energy System released earlier this week, I took issue with energy price subsidies, whether in the form of the 10% rebate on electricity bills currently delivered through the Ontario Clean Energy Benefit, or the idea of removing the HST from energy costs.

Removing energy subsidies is always going to be tricky politically, as Adam Radwanski skilfully pointed out in the Globe and Mail. But I still think it’s the right thing to do.

First off, let’s remember that the money for these subsidies doesn’t fall from the sky – it comes from your tax dollars. The Ontario Clean Energy Benefit will cost us 1.1 billion dollars this year. Under the Benefit’s current design, the size of your rebate is tied directly to the amount of energy you use. So if you and I have the same income, but I use twice as much energy, the Benefit will essentially transfer money from your pocket to mine; not very fair, and not an incentive to conserve energy.

As with many goods or services, the amount of energy we use will depend on the price. If we keep the price of energy artificially low through subsidies, we’ll use more of it, and undercut our conservation efforts. One study estimated that the 10 per cent reduction in the price of electricity provided by the Clean Energy Benefit will increase total electricity consumption in Ontario by 1.3 per cent. That will eliminate one-third of the electricity savings expected from utility conservation programs between 2011 and 2014.

It gets even worse in the long term. When deciding whether to invest in conservation measures such as insulation or higher efficiency appliances, most people compare the extra upfront cost they will pay with the savings they will see over time from lower energy bills. Keeping the price of energy artificially low distorts this comparison, making investments in energy efficiency less attractive to the consumer.

People often tell me that removing energy subsidies is unfair to low-income people or to families. There are two ways around this: A government can offer rebates or tax credits to protect vulnerable groups. You could expand these rebates and credits to everyone, but that will likely depend on your political beliefs. From an environmentalist’s perspective, I make just one request: don’t tie the size of the credit to the amount of energy you use!

Secondly, if you want to minimize any tax credits, create programs to help low-income households conserve energy by helping them make home improvements. My report commends the government for the province-wide low-income program it’s recently developed, particularly for encouraging a co-ordinated approach between electric and gas utilities.

This approach can be applied more generally to all consumers. Instead of subsidizing the price of energy, we could use government funds to reduce our energy bills by investing in conservation. That would be a much better idea than cancelling energy conservation programs such as the Home Energy Savings Program, which the Ontario government just did.

So it might not be popular, but I’ll stand by my comments – subsidizing the price of energy is not fair, and it hurts the cause of conservation.

Energy efficient houses can yield significant lifetime cost savings for homeowners. On the other hand, if buildings and neighbourhoods are built without energy efficiency in mind, inefficiencies can be “locked in” to the building stock for decades. Retrofitting for alternative energy systems can be expensive and, depending on the initial design of the building or neighbourhood, may not be practical or even possible. To avoid lost opportunities during the design and construction of new buildings, it is therefore important to adopt energy-efficient technologies from the outset of planning and building our communities.

In this year’s Annual Energy Conservation Progress Report – 2010 (Volume One): Managing a Complex Energy System, the Environmental Commissioner of Ontario examined barriers to the uptake of alternative energy systems. Why are technologies such as passive solar design, geoexchange, solar thermal and solar photovoltaic still achieving relatively low penetration in new residential developments?

One of the most commonly cited barriers to the use of alternative energy systems in new homes is the up-front costs for the homebuyer. Some financial barriers include:

• Lack of government incentives: There are currently no federal or provincial grants for new homebuyers or for builders wishing to invest in alternative energy technologies. Existing incentives focus on traditional energy efficiency measures (e.g., efficient air conditioners, boilers, etc.) rather than alternative energy systems. Further, the lack of government incentives – or the uncertainty caused by rapid changes to incentive programs – is leading to a lack of capacity in alternative energy industries and professionals.
• Home energy ratings are not mandatory: Mandatory home energy ratings can: foster a market premium for energy efficiency due to increased awareness of efficient buildings; build capacity; and, assist market transformation to a high efficiency residential sector. The ECO urges the government to enact the Green Energy Act, 2009 provision for mandatory home energy ratings at time of sale of a property.

Our report identifies several policy and regulatory barriers that could provide opportunities for change, including:

• The Ontario Building Code does not do enough to recognize the benefits of alternative energy systems: Alternative energy systems are voluntary options in housing development. The province could use the Ontario Building Code to make alternative energy systems mandatory, rather than voluntary, or use partial measures under the Building Code to encourage these systems.
• There is no tracking of alternative energy system uptake: The Provincial Policy Statement, 2005 states that planning authorities shall support energy efficiency through development patterns that promote design and orientation that maximize the use of alternative or renewable energy. However, the government has no performance indicators to determine whether this direction is achieving any effect in municipalities.
• Energy efficiency measures focus on individual buildings, rather than neighbourhoods: Energy use has been an unplanned consequence of land use planning decisions, rather than being taken into account in an integrated way during initial planning stages. A challenge for the province remains in integrating planning for alternative energy use at the neighbourhood and landscape scale. Organizations such as Quality Urban Energy Systems of Tomorrow and the Canadian Urban Institute, along with government and agency partners, have been examining ways of integrating energy planning with community design.

For additional information on the barriers to alternative energy systems in new housing developments, please see the ECO’s Annual Energy Conservation Progress Report – 2010 (Volume One): Managing a Complex Energy System.

Toronto, June 14, 2011 – Ontario’s Environmental Commissioner says the province’s energy regulator is putting up barriers to increased energy conservation. This is just one of the conclusions from his Annual Energy Conservation Progress Report – 2010 (Volume One), Managing a Complex Energy System, released today.

• Watch the webcast of the press conference live from Queen’s Park
• Watch videos of the Commissioner outlining key points of the report:
  • Overview
  • Electricity pricing
  • Smart Grid
• Click here for more information about the report
• Download the report on your computer (.pdf)
• Download the entire report on your mobile device (.epub)

“The Ontario Energy Board (OEB) plays a valuable role in protecting consumer interests, but this traditional regulatory function is in conflict with its expanded powers over conservation,” says Commissioner Gord Miller. He points to recent decisions by the OEB that have forced both electricity and natural gas distributors to restrict the conservation programs they offer to consumers.

One of the OEB’s key objectives is to promote energy conservation, but the Board recently told Union Gas and Enbridge Gas Distribution to curtail proposed increases in their conservation budgets and instead, freeze them at existing levels for the next three years. “The ‘low-hanging fruit’ in conservation has already been harvested,” says Miller, “but the Board won’t approve the investments that are necessary to accomplish further energy savings. The Board is ignoring the benefits that will come with reduced infrastructure costs and lower greenhouse gas emissions.”

The progress report also says the OEB has established rules that could hinder the Conservation and Demand Management (CDM) programs offered by the province’s electricity utilities. “The Ontario Power Authority has designed province-wide conservation programs, yet it’s the electric utilities who will carry them out. The Ontario Energy Board has given utilities all of the responsibility but none of the freedom to modify or improve programs if necessary.”

Conservation is only one of the areas where the OEB has been asked to take on an expanded policy-making role. The government has also told the OEB to facilitate the adoption of the smart grid – a modernized electricity system that uses information technology to operate more efficiently. Miller believes that “one entity has to be given the responsibility for establishing the vision of an integrated electricity system, and providing the leadership for modernizing our electricity grid.” However, the Commissioner questions whether the OEB would be the appropriate choice to achieve this innovative objective, given its conflicted responsibilities.

For more information, contact:

Maria Leung
Communications and Outreach Coordinator
Environmental Commissioner of Ontario
416-325-3371 / 416-819-1673
1-800-701-6454
Maria.leung@eco.on.ca

For French language release and bilingual support, please contact:
Jean-Marc Filion, 705-492-6997
The report is available for download at www.eco.on.ca

Aussi disponible en français

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The Environmental Commissioner of Ontario is the province’s independent environmental watchdog. Appointed by the Legislative Assembly, the ECO monitors and reports on compliance with the Environmental Bill of Rights, the government’s progress in reducing greenhouse gas emissions and its actions towards achieving greater energy conservation in Ontario.

Toronto, June 14, 2011 – Ontario’s Environmental Commissioner says the Ontario Clean Energy Benefit (OCEB) is a perverse incentive that could endanger the energy conservation savings the government is hoping to achieve.

• Watch the webcast of the press conference live from Queen’s Park
• Watch videos of the Commissioner outlining key points of the report:
  • Overview
  • Electricity pricing
  • Smart Grid
• Click here for more information about the report
• Download the report on your computer (.pdf)
• Download the entire report on your mobile device (.epub)

In his Annual Energy Conservation Progress Report – 2010 (Volume One): Managing a Complex Energy System, released today, Gord Miller says “The 10 per cent rebate on electricity bills is an artificial subsidy on the price of electricity so it encourages consumers to use more.” A study by energy analysts estimated that the OCEB could wipe out a third of the planned conservation savings over the next four years.

Miller praises the government for introducing time-of-use pricing that encourages households and businesses to shift their consumption away from periods of high demand, but noted that price subsidies undercut this development. Prices will necessarily rise because of a backlog of transmission investments and new generation projects.. “Unfortunately, the government hasn’t addressed the issue of rising prices in a way that prioritizes conservation,” says Miller. “Instead it has continued the failed policy approach of the past where the government’s only answer to higher electricity prices is to artificially lower electricity prices.”

If the government feels the need to help consumers with the higher energy costs it could make the benefit a fixed amount, instead of tying it to consumption levels. “That way,” says Miller, “the Clean Energy Benefit would be less of a disincentive to electricity conservation.”

Miller is also concerned about delays in rolling out Ontario’s important Conservation and Demand Management (CDM) programs. Between now and 2014, electric utilities, supported by the Ontario Power Authority, are supposed to reduce overall electricity use, as well as peak demand. “Province-wide conservation programs were all supposed to begin in January 2011,” says the Commissioner, “but the delays mean we will miss opportunities this year.”

The Environmental Commissioner is also questioning a recent decision by the Ontario Energy Board to freeze conservation budgets for Union Gas and Enbridge Gas Distribution, particularly at a time when the government has cancelled its own conservation programs for gas consumers. “The Board has too narrow a view about the benefits that will come with increased conservation. It is ignoring the avoided infrastructure costs and reduced greenhouse gas emissions that will come with reductions in consumption of natural gas.”

For more information, contact:
Maria Leung
Communications and Outreach Coordinator
Environmental Commissioner of Ontario
416-325-3371 / 416-819-1673
1-800-701-6454
Maria.leung@eco.on.ca

For French language release and bilingual support, please contact:
Jean-Marc Filion, 705-492-6997

The report is available for download at www.eco.on.ca

Aussi disponible en français

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The Environmental Commissioner of Ontario is the province’s independent environmental watchdog. Appointed by the Legislative Assembly, the ECO monitors and reports on compliance with the Environmental Bill of Rights, the government’s progress in reducing greenhouse gas emissions and its actions towards achieving greater energy conservation in Ontario.

(Toronto, ON, June 14, 2011) The Environmental Commissioner of Ontario (ECO), Gord Miller, has published the Ontario government’s first report in EPUB format (.epub): Annual Energy Conservation Progress Report – 2010 (Volume One): Managing a Complex Energy System. This will allow more Ontarians (and people in other jurisdictions) to access the report and learn about the Ontario government’s performance in environmental policies.

• Watch the webcast of the press conference live from Queen’s Park
• Watch videos of the Commissioner outlining key points of the report:
  • Overview
  • Electricity pricing
  • Smart Grid
• Click here for more information about the report
• Download the report on your computer (.pdf)
• Download the entire report on your mobile device (.epub)

The Environmental Commissioner of Ontario reading his annual conservation report in EPUB format on his tablet

“Twenty years ago, if someone wanted to read a government report, they had to go to a library. Today, accessing the report is as simple as downloading and opening it on a tablet,” stated Commissioner Miller.

Reports published electronically not only increase accessibility, but also benefit the environment. “Before the Internet era, we were required to produce 5,000 printed copies of each of our annual reports,’ said Miller. “Now that the Internet has become a part of most people’s lives, we can and do publish our reports electronically. We now use much less paper and save thousands of dollars every time we prepare a report.”

The Toronto Public Library (TPL) has included the EPUB version of Annual Energy Conservation Progress Report – 2010 (Volume One): Managing a Complex Energy System in the collections. To access the report through the TPL, please visit http://www.torontopubliclibrary.ca

To download the EPUB version of Annual Energy Conservation Progress Report – 2010 (Volume One): Managing a Complex Energy System, visit www.eco.on.ca

Reports published in EPUB format by the ECO are available free of charge from the ECO website. All future reports will be available in the following formats: print, PDF, HTML and EPUB (.epub).

For more information visit http://www.eco.on.ca

To schedule interviews, contact:

Maria Leung, Communications & Outreach Coordinator, 416-325-3371 or email maria.leung@eco.on.ca.

Aussi disponible en français.

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The Environmental Commissioner of Ontario is the province’s independent environmental watchdog. Appointed by the Legislative Assembly, the ECO monitors and reports on compliance with the Environmental Bill of Rights, the government’s progress in reducing greenhouse gas emissions and its actions towards achieving greater energy conservation in Ontario

Media Advisory

Environmental Commissioner of Ontario to release Volume One of 2011 energy conservation report

The Environmental Commissioner of Ontario will release his 2010 energy conservation report, Annual Energy Conservation Progress Report – 2010 (Volume One), Managing a Complex Energy System. The report reviews policy developments, highlights concerns with the current policy agenda and provides recommendations for energy conservation in Ontario.

WHAT: Release of the Environmental Commissioner’s Annual Energy Conservation Progress Report – 2010 (Volume One), Managing a Complex Energy System.

WHO: Gord Miller, Environmental Commissioner of Ontario

WHEN: Tuesday, June 14, 2011 at 10:00 a.m.

WHERE: Room 149, Queen’s Park Media Studio, Legislative Assembly of Ontario
Legislative Building, Queen’s Park, Toronto, Ontario

For more information or to schedule interviews, contact:
Maria Leung, Communications & Outreach Coordinator,
416-325-3371 or email maria.leung@eco.on.ca.

For French language release and bilingual support, please contact:
Jean-Marc Filion, 705-476-9665.

• To watch the live broadcast of the media conference, please visit http://www.eco.on.ca/index.php/en_US/eco-webcast.

• Media not currently accredited by the Legislative Assembly (Queen’s Park) Media Gallery must register with the Press Gallery if they wish to participate in the conference. To register, contact Gerald Christopher, Press Gallery Coordinator – Room 387A or 416-325-7922 or gerald_christopher@ontla.ola.org.

• The full Report will be available in print, PDF and e-book (.epub) formats at 10:00 a.m. on June 14, 2011. To download the report, visit http://www.eco.on.ca.

• Pre-recorded remarks from the Environmental Commissioner will be available at 10:00 a.m. on June 14, 2011. To watch Environmental Commissioner’s pre-recorded comments, visit http://www.youtube.com/user/EcoComms.

Aussi disponible en français.

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The Environmental Commissioner of Ontario is the province’s independent environmental watchdog. Appointed by the Legislative Assembly, the ECO monitors and reports on compliance with the Environmental Bill of Rights, the government’s progress in reducing greenhouse gas emissions and its actions towards achieving greater energy conservation in Ontario.

As discussed in my recently released Greenhouse Gas Progress Report, I believe that Ontario must establish a price for carbon. Such an approach, whether in the form of a tax or a cap-and-trade system, is supported by the majority of energy and carbon intensive industries in Canada and is already being used in three provinces (B.C., Quebec & Alberta) to manage greenhouse gas emissions (GHGs). A carbon price acts as a signal that encourages energy consumers to reduce the carbon footprint of their energy use, whether through reduced consumption (i.e. conservation) or a shift to low-carbon energy sources, and is thus critical for de-carbonizing the provincial economy and powering the growth of green industries.

I am often asked why a price on carbon is needed. The reality is that the price we pay for energy does not include the environmental, economic and social costs of climate change. As atmospheric GHGs continue to rise beyond levels considered safe by the world’s best scientists, the prospects of preventing future impacts on water resources, food production, and human health becomes increasingly bleak. The cost of these impacts is estimated to be in the range of 5% of global GDP annually (in Ontario this would translate into $26 billion in lost economic activity per year!). Thus, while transitioning Ontario’s energy system to a low-carbon pathway could be costly in the near term, a price on carbon can help to reduce these future damages. And, the sooner that carbon is priced in Ontario, the more time Ontario families and firms will have to adapt and thrive in a carbon-constrained world.

If Ontario were to go the route of a carbon tax like the one in B.C., it would impose an additional charge on fossil fuel producers or importers based on the carbon-content of their fuel. Thus fuels with relatively high carbon content would be taxed more than those with lower emission profiles. B.C.’s carbon tax is currently at $20/tonne which translates into an additional 4.45¢/litre on the price of gasoline. $727 million was collected from the carbon tax in 2010/11 which has been used to reduce personal and business taxes to the lowest levels in Canada. Quebec’s carbon tax is similarly levied on fossil fuel distributors in the province who are required to pay a fee of 0.8¢/litre of gasoline distributed. The $200 million/year collected through the tax is used to fund the province’s Climate Change Action Plan programs.

A carbon tax provides price certainty and ease of implementation (because of the existing tax system), but results in a visible increase in prices and is thus politically challenging to implement. Ontario has apparently chosen the route of a cap-and-trade system which requires the government to establish a cap on total emissions and distribute a corresponding number of permits to large emitters such as cement and steel production facilities. A carbon market is created because firms that emit less than the permits they hold can sell them to firms that are short on permits.

Properly designed, either cap-and-trade or a tax can provide significant economic benefits over the long term. Carbon revenues generated by a tax or the sale of emissions allowances can be used to reduce other taxes (i.e. income or corporate tax), reduce the deficit (as is done in Britain), or contribute to further low-carbon energy investment in the province. And, with Ontario sending more than $13 billon/year to outside jurisdictions to import gasoline (not to mention natural gas and other fossil fuels), a carbon price can help keep more money in the province now and shift consumption away from carbon-intensive imported fuels over the long term.

The United Nations designated May 22 the International Day for Biological Diversity, to increase understanding and awareness of biodiversity issues around the world.  To celebrate this year, the Environmental Commissioner of Ontario created a quiz to test your knowledge about Ontario’s biodiversity.

In honour of World Environment Day, June 5th, we’re happy to announce we have a winner – they will be contacted directly to get their prize.

Here are the results with the correct answers highlighted:

Biodiversity Quiz

1. In simple terms, what is biodiversity?

1. The variety of life on Earth and the natural patterns it forms (77% got it correct!)
2. The number of species on Earth
3. The genetic variations between species
4. The diversity of ecosystems in the world

2. What composes biodiversity?

1. The variety of species on Earth
2. The genetic variability of each species
3. The variety of different ecosystems in the world
4. All of the above (85% got it correct!)

3. What are the major ecozones in Ontario?

1. Boreal Shield, Hudson Plains and Mixed Woods Plains (85% got it correct!)
2. Boreal Forest and Tundra
3. Carolinian Forest and Hudson Plains
4. Great Lakes, Tundra, Forest

4. What percent of Ontario’s lands are protected in parks?

1. 12%
2. 17%
3. 37%
4. 9% (62% got it correct!)

5. How many species at risk have been identified in Ontario, by the Committee on the Status of Species at Risk in Ontario (COSSARO) (as of September 2010) ?

1. 207 (62% got it correct!)
2. 56
3. 560
4. 315

6. What is the leading cause of endangerment for Ontario’s species at risk?

1. Invasive species
2. Habitat loss and degradation (92% got it correct!)
3. Pollution
4. Disease

7. What are ecosystem goods and services?

1. The benefits from spending time in the outdoors, close to biodiversity – e.g., camping
2. The benefits humans derive from biodiversity – including food, wood and other raw materials; as well as natural functions such as pollination of crops, prevention of soil erosion and water purification (77% got it correct!)
3. The variety of life on Earth

8. What is the purpose of Ontario’s Environmental Bill of Rights?

1. To protect, conserve and restore the integrity of the environment
2. The protection and conservation of biological, ecological and genetic diversity
3. The protection and conservation of natural resources, including plant life, animal life and ecological systems
4. All of the above are purposes of the Environmental Bill of Rights (85% got it correct!)

9. What international agreement aims to conserve the world’s biodiversity?

1. Convention for Biological Diversity (77% got it correct!)
2. Convention on International Trade in Endangered Species
3. United Nations Environment Programme
4. Kyoto Protocol

10. What government ministry is responsible for protecting Ontario’s biodiversity?

1. Ministry of Natural Resources
2. Ministry of the Environment
3. All ministries, because the entire Ontario government is responsible (85% got it correct!)
4. Ministry of Northern Development, Mines and Forestry