Why is Ontario’s green plan powered by so much central planning? – by Globe Editorial (May 18, 2016)


The Ontario Liberal government’s ambitious “Draft Climate Change Action Plan,” the text of which was leaked to The Globe and revealed on Monday, left us scratching our heads. The problem is not the ambition: Ontario has rightly pledged to reduce greenhouse gases, with 1990 emission levels to be cut by 15 per cent in 2020, 37 per cent by 2030 and 80 per cent by 2050.

Those targets won’t be easy to achieve, but if the science on global warming is right (we think it is), and if the international commitments that Canada and much of the world have signed onto mean anything (they should), then a long-term plan to steadily reduce greenhouse gas output is necessary.

It’s not Ontario’s low-carbon destination that has amber lights flashing. It’s the road it is choosing to get there. Governments are terrible at central planning.

They aren’t any good at micromanaging an economy, because they don’t have enough information to do it as efficiently as millions of consumers and companies, each of whom can size up their own costs and savings opportunities, while adjusting to constantly changing price signals.

That’s why most economists think the most efficient way to achieve a big social objective like reducing carbon emissions is to put a price on carbon and let citizens and businesses, through billions of individual decisions, figure out how best to lower their carbon costs. Unfortunately, Ontario’s Liberal government appears to be cribbing from a different textbook.

The strategy laid out in the draft climate action strategy calls for Queen’s Park to cajole or financially bribe Ontarians into or out of various forms of energy. The big objectives in the plan are to be achieved by subsidies, or flat-out government orders.

For example, 76 per cent of Ontario homes are currently heated with natural gas. The Liberals are proposing to offer subsidies “of up to $20,000” to anyone purchasing a new home using electricity, rather than gas. That’s the carrot. The government also wants new building regulations, which by 2030 will make it against the law to heat new homes with natural gas. There’s the stick.

For the rest of this editorial, click here: http://www.theglobeandmail.com/opinion/editorials/why-is-ontarios-green-plan-powered-by-so-much-central-planning/article30067945/