Does Ontario need a ‘Green New Deal’ of its own?

ANALYSIS: For generations, the iron rule of electrical power was that it had to pay for itself. John Michael McGrath asks whether that rule needs to bend in the face of climate change
By John Michael McGrath - Published on February 8, 2019
U.S. Congresswoman Alexandria Ocasio-Cortez
Democratic U.S. representative Alexandria Ocasio-Cortez delivers a speech on the so-called Green New Deal in Washington, D.C. (Shawn Thew/CP)



The debate in the United States over the “Green New Deal” — a set of proposed and vaguely defined programs intended to combat climate change while also achieving a number of other progressive economic aims — is still very much in the early stages. Democratic senator Ed Markey of Massachusetts and Democratic representative Alexandria Ocasio-Cortez of New York this week released the closest thing yet to a detailed vision of the Green New Deal, and while it’s sprawling and ambitious, it doesn’t really qualify as a “plan,” as it doesn’t lay out concrete proposals for achieving its goals.

Which isn’t to say that others aren’t working on ideas. Earlier this year, the People’s Policy Project, a left-leaning American think-tank, suggested revisiting an old but straightforward one: using tax dollars and government-backed loans to help finance green energy and phase out carbon-spewing power plants. Canada’s argument over climate policy in 2019 is likely to boil down to “Carbon tax: Necessary evil or just plain evil?”; the American debate is, for now, open to ideas that would be unthinkable here — and we could stand to learn from it.

Ontario — the only North American jurisdiction to phase out a large amount of coal power from its electricity grid — for the most part didn’t subsidize that move directly with tax dollars. The renewable power, new transmission lines, and new nuclear generation that helped the province phase out coal were paid for through electricity bills, not tax returns.

As far as the rules of energy regulation go, this is how it’s supposed to be: users should pay the costs of services. But the political consequences of Ontario’s energy policy were catastrophic for the Liberal party and have arguably set back the entire idea of renewable energy and climate policy in this province for at least an election cycle, if not longer.

Importantly, climate change is a policy problem unlike any other. It’s multi-generational and existential; unless action is taken soon, our children and grandchildren may be born in a Canada we no longer recognize. But the costs of upfront action are daunting.

Which brings us to the lever that governments have always used to make the future pay for the needs of the present: public debt. What would Ontario politics look like if, instead of making ratepayers bear the burden of decarbonizing our power grid, some — or all — of that burden had been borne by the government?

In the U.S., the Green New Deal has also been wrapped up in a debate over Modern Monetary Theory, or MMT, which argues that the constraints on deficit spending are far less severe than commonly believed. The more basic question, though, is whether we should pay for electricity in the way that we pay for cable TV (customers shoulder the burden) or treat it as we do public transit or roads (taxpayers shoulder most of the burden).

Given the tens of billions of dollars the Liberals committed Ontario to paying under the Fair Hydro Plan, it’s not even clear that we’d have ended up with more overall debt on the provincial books — we’d just have categorized it and paid it down differently.

Mark Winfield, a professor at York University, who has authored a chapter on electricity policy for a new book on Ontario politics, Divided Province, said he is skeptical of the idea that spending public dollars on green power is a better idea than having customers pay for it.

“One of your basic sustainability principles is that passing costs on to future generations on the assumption they’ll be better off is a no-no,” Winfield told over the phone. “We’ve tended to leave the future with problems, of which climate change is one of the obvious poster children.

“You have to be awfully certain you’re making the right investment if you’re banking on future generations, and our track record isn’t good,” he added.

Winfield would rather see Ontario take an early “off-ramp” from the rebuilding of the Bruce and Darlington nuclear plants and invest more in renewable energy instead of being “locked in” to the nuclear industry.

Green party leader Mike Schreiner was also skeptical, saying that he believes renewable energy is getting cheap enough that it’ll soon be able beat coal and gas-fired electricity in the marketplace without needing subsidies.

“There’s a solar company here in Guelph doing business installations, and they’re looking at eight cents a kilowatt hour,” Schreiner noted this week. “Once Darlington’s refurb goes through, you’re going to see a significant increase” in the cost of electricity.

(The provincial Financial Accountability Officer reported in 2017 that Ontario’s decades-long nuclear refurbishments are generally being well-managed but that electricity costs are projected to go higher and peak above nine cents per kilowatt hour in 2027 before falling below the current average — about eight cents — in the 2030s.)

Unsurprisingly, the Green party leader has no problem, in principle, with using public dollars to reduce carbon-dioxide emissions. But he thinks that, given Ontario’s already low-carbon power grid, tax dollars would be better spent on public transit, electric vehicles, and retrofitting existing buildings to consume less energy.

Keith Stewart, a senior energy strategist with Greenpeace Canada, responded more positively to the idea.

“I’ve been frustrated with a lot of the debate around climate, because it’s made a carbon price the litmus test for whether you’re serious about climate policy or not,” Stewart said. “So much of this is actually a question about infrastructure — not marginal choices by consumers.”

“The obsession with keeping all of these costs on the rate base was a late-20th-century thing,” he added. “Ontario actually electrified the rural countryside faster than pretty much anywhere else, with a huge benefit for the province. And they did that because it was ‘power for the people’ — it was a public good.”

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