The cancellation of cap-and-trade will come with a hefty $3 billion price tag over the next four years, according to Ontario’s financial watchdog.
The review by the Financial Accountability Officer (FAO) found the Province’s deficit is expected to “deteriorate” by $841 million this year, followed by $615 million in 2019 and $771 million in 2020, as a result of the cancellation.
The FAO, Peter Weltman, also says the loss of cap-and-trade could expose homeowners and drivers even higher heating and gasoline costs.
The federal government is expected to impose a $50-per-tonne carbon tax on provinces that don’t have their own carbon limiting plan. The FAO estimates a federal backstop will cost the average Ontario household $648 in extra costs by 2022, versus $312 under cap-and-trade.
However, the Trudeau Liberals have promised to share that money back with residents in the province. If that happens, the FAO says, households could receive more money than they spend on carbon costs.
“Eighty per cent of households in Ontario would be better off under that scenario than under cap-and-trade,” Weltman told a news conference on Tuesday.
The Ford government cancelled the cap-and-trade program just days after being sworn in, calling it a “cash grab” and vowing Ontario households would save $260 per year.
The cap-and-trade system began in 2017, under the watch of Kathleen Wynne’s Liberal government. It put a cap on the amount of greenhouse gasses Ontario businesses could emit. Companies that exceeded the cap could buy credits at auction.
- With files from the Canadian Press
