ONTARIANS WILL BE FORCED TO PAY FOR IMAGINARY ‘CREDITS’ JUST SO THE GOVERNMENT CAN FEEL GOOD
This column was published in in the Financial Post.
For a time it was fashionable to buy a star in the sky and name it after a love interest, a new baby or a recently deceased loved one. Could anything be more romantic or more sentimental?
It turns out that the companies that take money from consumers for “naming stars” are the only ones who actually recognize the name. The practice is considered by many to be a kind of scam that profits off of the idealism of consumers. Money for a star name is just money for nothing.
It’s a lesson that Ontario politicians should listen to.
Like buying a star, Ontarians will be buying “carbon credits” starting January 1st – financial product conjured out of thin air by the government. The unfortunate difference is that unlike a star name, we in Ontario are being forced to buy them.
The Ontario government’s cap and trade scheme will limit the emissions Ontario companies can produce, and they must purchase “carbon credits” to pay for any emissions above their government assigned limit. These “carbon credits” are financial products that are traded like other useful things on a government created “carbon market.” But unlike other commodities such as pork bellies, corn or west Texas crude oil, carbon credits do not actually exist. You cannot touch them. There is no underlying tangible asset. The value of the carbon credit comes from a fictional demand that the government created by forcing businesses to buy them.
The closest carbon credits come to having a tangible asset is in California, where existing forests can be registered as carbon offset projects. The landowner can register an existing forest with the government, and be issued a carbon offset credit that can be sold. With this kind of offset project, nothing actually changes. Before the registration there is a forest and emissions. After the registration, there is still a forest and emissions, but now the forest owner has a cash infusion. The emitter continues to emit, but incurs a new cost, and pushes that cost down to consumers. Like buying a star, nothing changes except you lost some money and now there is a mark in a leger that others don’t even recognize.
It isn’t recognized because this kind of transaction is not eligible to be considered a carbon offset in Europe. But because Ontario has hooked itself into California’s Western Climate Initiative, existing forests will likely be eligible to be registered as carbon offset projects. The criteria are currently being developedin conjunction with Quebec.
The idea behind the whole scheme is that it will lead to lower emissions and stop the march of global warming.
The problem, like buying a star, is that it doesn’t work. Maybe it gives you a warm fuzzy feeling, but the fact is that cap and trade will not achieve anything for the global climate. Canada contributes just 1.65 per cent of global greenhouse gas emissions, with only a tiny portion of that coming from Ontario. The buying and selling of carbon credits will make no real difference. In fact, shutting down the entire Ontario economy would make no measurable difference to global climate change.
But despite not achieving anything for the climate, cap and trade will make things in the province more expensive. Whether it’s your home heating bill, your gasoline bill, or the cost of groceries that need to be transported to your local store. Those costs will not be borne by the industries that the government is forcing to buy these products. The costs will be borne instead by Ontario families.
Life in this province under this scheme will become increasingly expensive. Tonight make a wish on a star – named, owned or not – that something happens to stop this newest government plan.