Ontario Premier-Elect Doug Ford Ditches Cap and Trade

Earlier this month, the Progressive Conservative Party of Ontario had a very good showing in the Canadian province’s general election. Not only will Doug Ford became Ontario’s next Premier (on June 29), but the Progressive Conservatives “won 76 of Ontario’s 124 districts” and his “win ends 15 years of Liberal Party rule,” according to Bloomberg. Because Ford ran on a populist, smaller government message, many political pundits are naturally grouping the Ontario election in with Brexit and Donald Trump.

However, there is also a specific energy component to this narrative. As (American) Energy Institute analyst Dan Byers reports, Ford’s forces “ran on a platform to repeal cap-and-trade and will nearly triple their seats,” while their opponents “the Liberals that imposed cap-and-trade 2 years earlier lose 47 seats out of 55.” And indeed, a week after the election Ford promised that he would “scrap Ontario’s cap-and-trade system and fight a federal carbon tax as soon as his Progressive Conservative cabinet is sworn in later this month because the measures hurt families and do nothing for the environment,” as described in a Financial Post article. This also means that Ontario will withdraw from the cap-and-trade system that it joined (with Quebec and California) in January of this year (though the first joint emission auctions did not occur until late February).

There are lessons here for those who follow the energy policy debate. First, even in a region—Ontario—where we might expect the voters to be very sympathetic to an ostensibly pro-environmental policy like cap-and-trade, people don’t like high energy prices. As Ontario’s cap-and-trade program immediately applied to natural gas companies, the obvious impact is to make electricity prices higher than they otherwise would have been. Back in May, a Canadian columnist discussing Ford’s campaign said that average Ontario households pay $500 because of the cap-and-trade plan, and explained how Ford could “end Ontario’s suffering from expensive electricity,” which included not just cap-and-trade but also renewable energy boondoggles.

This is the same pattern we saw in Australia. Its 2012 carbon tax went hand-in-hand with a spike in electricity prices, such that the voters swept in a new Prime Minster (Tony Abbott) the following year who promised to repeal the then-loathed tax. (The Australian Senate then blocked Abbott’s attempt at repeal, leading to even more confusion for businesses and citizens.)

The second main lesson is that political “solutions” to climate change are always one election away from being unraveled. Even if one agreed with the case for political interventions limiting greenhouse gas emissions—which I have critiqued often—it is still a very risky strategy to say, “Let’s adopt a policy that requires the ‘right people’ to win elections through 2100.”

The third lesson is that political limits on carbon emissions on a state or regional level are particularly futile. California’s cap-and-trade program—in place since 2012 with enforcement the following year—never made any sense, even on its own terms. By its very nature, global climate change is a global issue. Even draconian limits imposed by a handful of US states and/or Canadian provinces won’t do much except punish the people living in those areas with sky-high energy prices. The operations that emit carbon dioxide can simply migrate to other jurisdictions.

The decisive ballot box showing of Doug Ford and his Progressive Conservative Party is providing fodder for analysts of all sorts. But on the matter of energy policy, the conclusion is clear: Political “solutions” to climate change, even if desirable, are simply impractical. Voters don’t like high energy prices, and climate policies are literally designed to make energy more expensive as a way to alter behavior.

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