Greenhouses burning coal

Tyler Hamilton of theToronto Star had an excellent piece yesterday documenting how Ontario greenhouses are turning to burning coal because of higher oil prices. This piece documents critical examples that illustrate why high oil prices are no substitute for a carbon tax when it comes to an incentive to reduce greenhouse gas emissions.

Here is an excerpt:

The Toronto Star has learned that dozens of other greenhouse operators in Ontario ... have switched or are considering a transition to coal as a way to save on fuel costs.

The impact so far appears small, but the trend is gaining momentum. As it does, it could undermine the environmental benefits of an Ontario government plan to wean the province off coal-fired power generation by 2014.

"Coal is expanding in the province, despite a policy to phase out coal," says Roger Samson, executive director of REAP-Canada, an independent group that encourages sustainable farming practices. "The Ontario government has no plan on how to mitigate this."

...

It's estimated that greenhouses in Ontario cover 2,823 acres, and that the average greenhouse requires 9,500 gigajoules of energy per acre every year. This works out to 26.8 million gigajoules annually.

Convert that energy into electricity potential and it works out to 7.44 terawatt-hours a year – more than three times the 2004 electricity output of the Lakeview coal-fired generating station in Mississauga (which has since been closed down and demolished).

To those of you participating in the local food movement: don't forget to think about the possible implications of greenhouse-grown food.

Good news for the Green Shift from the Canadian Taxpayer's Federation

The Canadian Taxpayer's Federation (CTF) released yesterday a "Green Shift impact analysis for Ontario Businesses". They said that new costs of $1.5 billion per year would be paid by 111 power plants and that tax cuts of $811 million would be shared by 365,649 Ontario businesses.

Why is this good news for the Green Shift?

If you look a little more carefully than they did at their own figures, you'll see that about three quarters of the extra tax paid is accounted for by the four coal burning power plants of Ontario Pwer Generation, owned by the people of Ontario.

But the McGuinty government's plan is to phase out these coal plants! A lot of the slack will be taken up by conservation and renewable energy. The Green Shift contains business tax breaks for using green technologies (accelerated depreciation) and a 25% refundable science, research and experimental development credit.

Furthermore, Ontario Power Generation's take of the federal income tax cut would be insignificant (OPG's annual report for 2007 shows income before taxes of $477M and $576M for 2007 and 2006 respectively) compared to all the businesses operating in the province.

So, very roughly but not so much more rough than the Canadian Taxpayer Federation analysis I would say, after the coal plants are shut down (or stop burning coal - there are plans to use biomass to fuel them) the carbon tax paid by the companies than own Ontario power plants would be about $380M while the business tax cuts would still be about $800M (and this economic stimulus does not include the stimulus from developing the green energy sector).

It is interesting to note that while publically owned Ontario Power Generation's plants occupy positions 1,2,4,5,6 on CTF's top greenhouse gas producers list, position 3 is occupied by a plant owned by TransAlta Corp., an Alberta company; position 7 is occupied by Exxon Mobil, the US based corporation; and in position 8, ATCO, is an Alberta company. So some of the private businesses the CTF is shedding tears for aren't even Ontario based businesses.

Canadian examples of why, with high oil prices, we still need a carbon tax

A letter to the editor by one Bruce McCallum from Hunt River, PEI, in the Globe and Mail today contains two good examples of how higher oil and gas prices can cause increased emissions and pollution by shifting use to cheaper, dirtier fuels. He writes,

"the district heating plant in Charlottetown recently switched from relatively clean, but increasingly costly light oil, used for peak heating in the winter, to much dirtier, higher-carbon bunker oil, costing roughly half as much."

"Greenhouse owners from across Canada frequently contact me ... frequently mention that they are also considering switching to coal. Coal is cheap and plentiful, but it is the dirtiest, highest-carbon fuel available."

There is no federal tax on the burning of coal presently. It's enjoying a free ride at the expense of cleaner sources of energy.

Mr. McCallum's conclusion is also worth quoting, "Without carbon taxes to level the energy playing field and steer people toward green energy alternatives and efficiency, Canada's GHG emissions will to continue to rise."

The Green Shift: Why it's the right time for this policy

Respected Globe and Mail columnist, Jeffery Simpson, wrote a column earlier this week entitled, "Carbon tax: the right policy, the wrong time" which claimed that, while a revenue-neutral carbon tax is a good policy in the long run, now is a bad time to implement it because the rapid rise in oil prices has, "create[d] genuine hardship for a lot of people". Simpson's article, I think, elucidates what Warren Kinsella said in a blog post which ended with: "I'm not saying no to a carbon tax. I'm saying no to a carbon tax now."

I don't doubt that many Canadians are experiencing some hardship now with the recent rise in oil prices. But that is a reason for providing some tax relief now with tax cuts and refundable tax credits. Look at Dion's Green Shift from another point of view: it's a plan to help Canadians with the higher price of oil by cutting income taxes.

How is this tax relief going to funded? Fortunately, not by borrowing from the future. We're already passing on much of the burden of dealing with environmental degradation to future generations. It will not be funded by cutting social programs. It will not be funded by increased taxes on gasoline because the existing federal excise tax on gasoline is already equivalent to a roughly $40/tonne CO2 tax. But it will be funded in a way that will gently put the brakes on our production of greenhouse gases.

People have been focusing too much on gasoline, and not enough about the fact that much of the Green Shift's tax relief will be funded by users of coal. Higher oil prices might make people think about using less gas, but they have also caused people to burn more coal, a dirtier energy source than oil. This is just one reason why higher oil prices are not a good substitute for a carbon tax.

Warren Kinsella, say yes to tax relief funded by a tax on fossil fuel CO2 emissions now!