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Ontario plans cap-and-trade system | TheHill

Amid the debate around Ontario's new carbon-pricing system, a number of big, scary myths have emerged that need to be debunked. Amidst all of the discussion, there is plenty of rhetoric, hyperbole, and questionable statements. Some of these have grown into large and scary myths which need to be debunked. The first myth is that the cap-and-trade system will significantly raise the already-high electricity costs for families and businesses.

As a result, the cap-and-trade system, which puts a price on carbon emissions, should add very little to electricity costs. The answer is no. This brings us to the third myth, that giving these permits to businesses undermines the carbon-pricing policy. This popular argument misses the crucial point of any carbon price.

The combination of the carbon price and the free permits gives businesses a clear incentive to reduce their GHG emissions by changing their operations but not by shrinking their economic activity.

The fourth myth is probably the biggest one of all — that a carbon price will not succeed in reducing GHG emissions. As consumers we know that we respond to higher prices by adjusting our purchases. Each household will react differently.

Ontario Cap And Trade | HuffPost Canada

Some will choose a more fuel-efficient vehicle, while others change the way they heat their homes or decide to insulate their basements or choose to have more staycations. For businesses, higher carbon-related costs will lead them to switch to cheaper inputs, some of which will only be developed in response to the demand induced by the carbon price.

They will also have the incentive to develop lower-emitting ways of making their products or delivering their services. But each business has the flexibility to figure out how best it can adjust to the carbon price. It is also why a carbon price — as opposed to intrusive and prescriptive government regulations — is such an efficient approach to reducing GHG emissions.

There is plenty of research from Canada and around the world showing that carbon prices actually do reduce GHG emissions. But nobody should expect dramatic results right away. It takes a while for households and businesses to adjust to new prices in the marketplace.

: Cap and Trade : Canadian Energy Law

Their responses will gradually occur, and emissions will gradually fall, especially as the carbon price rises over time. There will no doubt be some growing pains in the first few years, and policy adjustments in response.

This is to be expected. The Toronto Star and thestar.

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