What's Next for Ontario?
The new Ontario government is in the process of developing a plan for addressing climate change, to replace the strategies of the previous government. Cap-and-trade was an efficient strategy, one founded in the conservative principle of letting the market decide what to do, but some of the other strategies were less efficient. For example, a $14,000 rebate for buying an electric car might cost over $500 per tonne of carbon reduction. The early FIT contracts, buying solar power at 80 cents/kWh, were even more expensive per tonne of reduction.
There is an argument that these programs provided a “market pull” to spur innovation. It’s likely that Ontario’s encouragement helped auto manufacturers bring more and better electric and hybrid vehicles to market. The development of wind and solar energy has been even more dramatic, with some wind-farm developers in other parts of North America now offering deals for long-term supply of wind power at less than 2 cents/kWh. Since Ontario’s programs in these areas have been canceled, we will have to hope that development continues based on activity in other jurisdictions.
Meanwhile, what do we do next in Ontario? At Posterity Group, we know a lot about how buildings use energy. We study space heating and cooling, water heating, lighting, appliances, office equipment, and all the other energy uses, what fuels they use, and what emissions are associated with those fuels. There are many things you can do in buildings that reduce carbon for far less than $500/tonne. In fact, many efficiency improvements pay for themselves out of their lifetime energy cost savings and therefore actually have a negative cost/tonne of reduction.
As an example, a rural Ontarian who currently heats his house with expensive oil or propane has several options for reducing emissions at very low cost per tonne. Heating with wood produces minimal carbon emissions at modest cost. A program to build up the wood pellet supply industry would increase the convenience to the homeowner, who would no longer need to split and haul cordwood.
If wood heating is not attractive, another option for this homeowner would be a cold-climate electric heat pump. Heat pumps are the predominant heating system in homes all over the world, but are much less common in Canada. They are expensive to buy, but certainly cost much less than a hybrid car, and the cost per tonne of carbon reduction is much lower. Innovative programs may be needed to make them attractive to Ontarians. For example, a utility company could finance the system and buy the electricity for it, and then sell heating to the homeowner for less than it previously cost to heat with oil or propane.
These examples are just the beginning. There are cost-effective options to improve the insulation and air-tightness of homes. There are also many efficiency improvements for commercial and institutional buildings that are even more cost-effective than the ones for homes. These improvements create jobs – in many cases, more jobs than the same amount of money invested in other industries. Building industry jobs also tend to stay in the province – I can’t send my basement to China to have it insulated and sent back. Policies like this are win-win-win: they help consumers and businesses with their energy bills, they reduce climate impact, and they create jobs. Bill savings create even more jobs, because people with more money in their pockets from lower utility bills tend to spend that money locally.
In this post we have focused primarily on efficiency in buildings, but we expect there are similar win-win-win strategies for transportation, heavy industry, and other sources of emissions in Ontario. What are your suggestions?