Category Archives: economy

TVO Battle Blog: Hydro Rates

economy, energy

Crossposted to tvo.org. Today’s question: “A number of Ontario industries, from the forestry sector in the north to the manufacturing sector in the south, are struggling. Some say we should help lower their costs by reducing the price of energy. Should Ontario lower its hydro rates?” (400 word limit)

As residential customers we already pay less than the true cost of energy, and large industrial users pay even less than that. This is perhaps the worst kind of corporate welfare, because it encourages waste and inefficiency while harming competitiveness and contributing to pollution and a distorted market economy. Lowering hydro rates would not only be an environmental disaster, but in the long run would harm these sectors more than it would help. To the contrary, we should raise them.

Am I under any illusion that pledging to raise electricity rates to their true cost will be an instantly popular idea? Of course not. But it’s the right decision, and it must be done. As long as we keep the price of energy artificially low (not factoring in real “externalized” costs caused by air pollution, climate change, nuclear disaster insurance, etc.) we’ll be unable to fully realize what policies (investments in renewable energy, efficiency, decentralized generation, etc.) are actually the most economically responsible and ecologically sane.

At the same time, however, we must ensure that lower-income people, who could be the most vulnerable to higher energy prices, are not left in the dark. Increasing the price of energy must be done within the context of a tax “shift” which reduces income tax. A Green government would also provide targeted financial supports for energy retrofits and other cost-saving measures, which can reduce energy consumption (and, therefore, energy bills) by up to 80%.

We must also ensure there are other kinds of supports made available to Ontario industries, including the forestry sector and manufacturing sector. There are huge opportunities in those areas for the creation of more “green-collar” jobs and more internationally competitive businesses. We should learn from the lessons of American car manufacturers who complained inexplicably that increasing their efficiency would hurt them, only to be left in the dust by their Japanese counterparts. By subsidizing the price of energy and keeping it artificially low, we are discouraging innovation and positive progress. Good, responsible government would do precisely the opposite.

Parity

canadian sovereignty, economy

During yesterday’s trading, and then again today, the Canadian dollar achieved parity with the US dollar. Our economic system is a complex beast, not even fully understood by experts. However, there are likely two broad explanations for the dollar’s rise.

First, the American economy is in serious trouble. The events triggered by the collapse of the sub-prime mortgage Ponzi scheme have not yet played out in full. The housing boom was a key driver of US economic growth, but now over one million Americans risk losing their homes. In order to keep the market from collapsing, the Fed has injected more money than they did in the wake of 9/11. The other key to US economic strength, consumer spending, is also quite vulnerable thanks to a negative savings rate, declining consumer confidence, an average credit card debt of $9000 per person, and an average national debt of $29,500 per person. Oh, and then there’s the little matter of the $3,000,000,000.00 per week war in Iraq. The fact that our dollar is doing so well compared to the greenback isn’t necessarily something to brag about. You’d look like a supermodel too if you were standing next to an ogre.

The second reason the loonie’s gone loony is that our dollar has generally come to be considered a “petrocurrency,” in the sense that it has a close and direct relationship with the price of oil. The fact that oil is now hanging-out above $80 a barrel and is projected to continue to rise is an indication that we’ve used up all of the easily-accessible supply. The stuff that’s left in the ground is dirtier, more expensive, and more energy-intensive to extract (reducing the Energy Return On Energy Invested), meaning that until we shift from a paradigm of perpetual consumption and growth to one of conservation and efficiency, our energy crisis will only get worse.

In other words, the “high” dollar is hardly cause for celebration. Add to that the fact that our economy is already starting to feel the effects of what is likely to be a US recession, and the fact that the Conservative budget left us absolutely no wiggle-room for dealing with this eventuality.

And then that word, parity, starts to take on another, more sinister and dangerous meaning. An alignment with the US economy so tightly integrated that we can’t escape the increasingly powerful gravitational pull of its implosion. An alignment with the US military so close that we can’t say no to American-led wars. An alignment with US energy policy so one-sided that our own citizens freeze in the dark.

Wait, isn’t that just the worst-case scenario? Yes. It’s also where we’re heading.

What They Knew Could Hurt Them

climate crisis, conservative party, economy

The line from the Conservatives is that taking enough action on the climate crisis to avert catastrophe would damage the economy (as if that’s a real choice). Then, two months ago, we found out that their own experts told them that the Green Party’s climate plan would have a negligible effect on the economy, and that they tried to keep that report secret. Today, we find out that their own experts were also telling them that their plan to reduce greenhouse gas emissions through tax rebates/feebates for new car purchases would be extremely inefficient with taxpayer dollars.

The Globe and Mail reports that a September 2006 report informed the government of the following:

The key findings from the working group are that the cost per tonne of GHGs reduced is high for all options; ranging from $150 per tonne for a permanent incentive that rewards very fuel-efficient vehicles without distinguishing between technology or class; to $2,350 per tonne, for example, for an incentive that differentiates between passenger vehicles and light trucks and expires after four years.

The second option–at a cost of $2,350 per tonne–is more or less what the government introduced in the last budget, and has since been a resounding failure. So, not only did they know that our plan (which, remember, is a tax shift of only $50 per tonne) would succeed in reducing emissions while not harming the economy, they also knew that their plan would be shockingly wasteful and produce mediocre results at best.

At first, I’m tempted to conclude that this government is trying to create economic damage with their climate inaction plan in order to prove themselves right, or even that they’re somewhat sociopathic. But then I’m reminded that I should never ascribe to malice that which can be explained by incompetence.

Power To Choose

climate crisis, economy, energy

Below (and here) is a video of comments I made a few weeks back at an event called “Power To Choose,” sponsored by the WWF, Greenpeace, the Ontario Clean Air Alliance, Sierra Club of Canada, and the Pembina Institute. I’m honoured to have been one of the five initial presentations chosen for the web, along with people like NDP MPP Peter Tabuns and Gord Miller. Regular readers may notice similarities to two previous posts, The Triple E Crisis, Plus and My Canada Includes The Laws of Thermodynamics.