By Lorrie Goldstein, Toronto Sun
She said it would be irresponsible to estimate how much more we’re all going to have to pay for virtually all goods and services, because the Liberals haven’t yet designed their cap-and-trade system.
This is very hard to believe.
The Liberals have been planning cap-and-trade for seven years.
It’s true they can’t come up with an exact price, because it depends on how quickly they plan to reduce emissions and what the market price of a carbon credit will be (more on that in a moment).
But for Wynne to claim she has no idea of the cost is absurd.
For heaven’s sake, someone in her government told the Globe and Mail recently the Liberals expect increased government revenues of up to $2 billion annually.
Don’t be fooled into thinking the one added cost the Liberals provided — about three cents more per litre of gas — is either accurate, or the only cost hike we’ll face, or that it will stay at three cents.
Fossil fuel energy, produced by burning oil, natural gas and coal, is responsible for modern civilization.
Industrialized societies like ours use it to grow, manufacture, create, produce, power and transport virtually all goods and services.
That’s why cap-and-trade increases the price of virtually everything, as opposed to a carbon tax which increases the tax on almost everything.
Under cap-and-trade theory — we’ll get to reality in a moment — Wynne’s government will set a gradually decreasing limit on annual carbon dioxide emissions from major Ontario industrial emitters.
It will then auction off carbon credits to these industries, permitting them to burn fossil fuels up to the limit their credits allow.
The government makes money by auctioning off the carbon credits to industry, who then pass this added cost along to consumers in higher prices.
These companies then buy and sell carbon credits among themselves in what amounts to a stock market, the theory being more energy efficient companies will have spare permits to sell to less efficient ones.
That’s the theory. The reality is cap-and-trade is especially vulnerable to insider manipulation, political corruption, fraud and organized crime, all of which happened in the world’s largest cap-and-trade market, the European Union’s decade-old Emissions Trading Scheme.
Those problems caused the market price of carbon credits to repeatedly crash, making it cheaper for companies to buy permits than reduce emissions.
In Europe, governments exempted entire industries from cap-and-trade and gave out so many free credits they outnumbered actual emissions, which meant emissions initially went up.
Some industries jacked up their prices to consumers as if they’d paid for carbon credits when they’d received them for free.
Finally, there was widespread fraud — both tax fraud and cases where carbon credits were issued without any real reduction in emissions.
In Ontario, major industrial emitters will now be lining up to pressure the Liberal government to (a) exempt them from cap-and-trade, arguing they compete with companies in other jurisdictions that don’t price emissions and/or (b) give them free carbon credits, the equivalent of free money.
In order to get favourable treatment from the government, they’ll do what big business always does — hire lobbying firms with close connections to the government while making big donations to the governing party.
That’s nothing new. It’s how big business operates when it wants something from government, no matter which party is in power.
The problem in cap-and-trade is that every time the government excludes another industry, or gives away carbon credits for free, it undermines the purpose of cap-and-trade, which is to reduce emissions.
That’s what happened in Europe and it’s going to happen here.