Clean Technology News

Industrial Decarbonization
The Fate of Ontario’s Carbon Tax Proceeds
Published on: August 17, 2023

Will the Government seize the opportunity to future-proof our economy?

The Financial Accountability Office of Ontario revealed in a recent report that it expects the Province to run large surpluses over the next five years. One source of these funds is a carbon tax on industrial emitters, which will bring in an estimated $2.2 billion over the next eight years. It remains unclear, however, how the government intends to spend the funds accumulated through the Emissions Performance Standards (EPS) Program.

Recent wildfires are just the latest compelling example of why we need to take urgent climate action, and, at the same time, future-proof our economy. These funds can help. Spent wisely, they can attract private investment, accelerate innovation, and support competitive growth and well-paying jobs for Ontarians. Many of the province’s energy-intensive, heavy emitting industries are concerned about how the price on emissions, as well as increasing electricity prices, will affect their ability to compete in global markets. They’re also concerned about being left behind as the world makes the transition to a clean future.

The EPS proceeds could be used to address these concerns. With EPS funds from utilities, Ontario could stabilize and drive down electricity costs with a program that complements the federal Smart Renewables and Electrification Pathways Program (SREPs), or an application program for utilities that ties the receipt of the funds to investments in grid modernization, smart grid development, energy storage, and renewables.

The proceeds collected from large emitters, including big players in the steel, cement, oil and gas, and chemical industries, could be used to fund decarbonization projects, accelerate clean technology innovation, and secure Ontario’s place as a leader in the clean growth economy.

To achieve these objectives, the proceeds could be allocated to an agency-administered fund designed to attract private investment and support the demonstration of new emission-reducing solutions in Ontario. A similar model exists in Alberta with Emissions Reductions Alberta (ERA) and its TIER fund. For every ERA dollar spent to advance new technologies, $7.20 has been invested by funding partners. In our province, the Ontario Centre of Innovation (OCI) would be well-positioned to take on a similar role.

Such a fund would award grants for GHG-reduction projects that bring together hard-to-decarbonize industries with promising Ontario-based cleantech companies – those that have the potential to become world leaders.

We have most of the ingredients to take a bold step towards low-carbon competitiveness and economic growth. Our province is home to a huge, thriving clean technology sector and world-renowned research institutions. What’s missing is significant investment and a clear, unwavering commitment by the government to support our transition to a clean, resilient economy.

Building a robust plan for the EPS funds and the projected surplus is critical to mitigating climate change and to securing a prosperous future for our province. We’ve got the resources – let’s make them work for us.

Maike Althaus, Executive Director, Ontario Clean Technology Industry Association (OCTIA)

Maike Althaus is the Executive Director of the Ontario Clean Technology Industry Association (OCTIA) and an award-winning communications & stakeholder engagement professional providing the necessary expertise to accelerate Canada’s transition to a clean economy.