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GOLDSTEIN

Corporations win, we lose with Premier Kathleen Wynne's cap-and-trade plan

By Lorrie Goldstein, Toronto Sun

Justin Trudeau and Premier Kathleen Wynne at a Liberal campaign rally in August 2015. (Toronto Sun file photo)

Justin Trudeau and Premier Kathleen Wynne at a Liberal campaign rally in August 2015. (Toronto Sun file photo)

Premier Kathleen Wynne’s cap-and-trade carbon pricing scheme will subsidize major corporations at the expense of Ontario taxpayers.

Of 240 industrial greenhouse gas emitters which will come under the scheme, 102 will receive free carbon credits from the government — free money — for at least the first four years of the program which starts Jan. 1.

The government says this is necessary because without the free credits, these businesses might abandon Ontario for jurisdictions that don’t have carbon pricing, a phenomenon known as leakage.

Of course, this is a major reason why it’s foolish for Canada to proceed with carbon pricing independent of our dominant trading partner, the United States, which doesn’t have a national carbon price, unlike the one Prime Minister Justin Trudeau will soon impose in partnership with the provinces.

Free carbon credits — which businesses can sell to competitors for a profit in addition to raising their own retail prices as if they had pay for them, aren’t only windfall profits to business paid for at public expense.

They also undermine the purpose of cap-and-trade, which is to set a price on emitting industrial greenhouse gases (GHGs) linked to climate change.

The Wynne Liberals estimate cap-and-trade will increase government revenues by $1.9 billion annually, to start, beginning Jan. 1.

Since both emitters who receive free carbon credits and those who have to buy them at government-run auctions will pass along their added costs to consumers by raising their retail prices, a rough estimate puts the cost at $387 annually per household for the 4.9 million households in Ontario, according to the last census.

This is 148% higher than the estimate the government gave Ontarians of $156 per household, since this applies to only two items — natural gas home heating fuel and gasoline.

In fact, carbon pricing raises the cost of almost all goods and services since almost all of them consume fossil fuel energy.

The Wynne government says it will spend the $1.9 billion a year it will receive from cap-and-trade to benefit the public by building more public transit, helping people to reduce their emissions and helping them to cope with the higher cost of living carbon pricing causes.

But if the government cared as much about helping the public as it does about big business, it would implement a revenue neutral carbon pricing plan called carbon fee and dividend, which raises sales or consumption taxes and then returns all of the money to the public through grants or income tax cuts.

This would actually help people cope with the higher cost-of-living carbon pricing brings, as well as create a real-world market demand for lower-emitting and thus lower cost goods and services, without any need for giving free carbon credits to big business.

But carbon-fee-and-dividend doesn’t generate any money for the government, which is why the cash-strapped Liberals aren’t interested in it. What they’re doing is a cash grab.