Take from the poor, and give to the rich. The reverse Robin Hood philosophy has been fully embraced by the Ontario government, an odd turn of events for the self-proclaimed "social justice premier."
Nothing shows this philosophy better than the government's newest costly experiment, the cap-and-trade carbon tax.
(Photo: Chris Boswell via Getty Images)
A spokesperson for Toronto-Centre MPP and Environment Minister Glenn Murray proclaimed that the government is eager to turn the Toronto Stock Exchange into a financial hub for carbon credits, stating that "Ontario's financial sector is well positioned to provide these services and then leverage this expertise to serve other growing carbon markets in Canada and internationally."
In other words -- cap and trade will cost working Joe's at the pumps and in their home heating bills, while Bay Street types get rich trading the new government created commodity.
Cap and trade works by putting a "cap" on the amount of emissions businesses can produce. The government then invents a new tradeable financial product out of thin air, called carbon credits. Businesses who are able to emit below their "cap" are allowed to "trade" those government created carbon credits on a government created "carbon market" to those who need to emit above their "cap."
(Photo: AlexSL via Getty Images)
Effectively, the government uses regulation to invent a demand, and then supplies it themselves.
But businesses are not the only ones entitled to participate in these trades. Cap and trade also allows for "market participants" who can trade on speculation. In fact, the entire idea of a carbon market is designed to encourage speculation, which drives up the price of the carbon credits. Correspondingly, companies that have to buy these expensive credits pass the cost along to customers. This can drive up the price of necessities of life, like home heating fuels and gasoline.
Financial speculators who might otherwise make their money trading stocks, bonds or oil futures, can now get rich trading a commodity that is essentially linked to your higher home heating costs. The higher your bills, the more the big boys on Bay Street make. And the Wynne government wants you to think this is a good thing.
This false market links Ontario with Quebec and California, allowing businesses and speculators to trade across borders. The Auditor General has found that by 2030, this will result in up to $2.2 billion in Ontarian's money leaving Ontario for Quebec and California.
This isn't the first market of its kind -- the experiment has been tried before. In his book Carbon Shock, Mark Shapiro described the European Climate Exchange (ECX) in London, the biggest platform for trading carbon emissions, and where 80 per cent of the European market in carbon credits is traded. For a time, carbon was the fastest-growing commodity in the world. In 2006, 450 million tons of carbon were traded over ECX, and by 2012, that figure had tripled to 1.3 billion tons, and to over 2 billion tons by 2013.
Enron and Goldman Sachs were some of the early adopters of the idea of getting rich speculating on carbon credits, with Enron helping to establish the market for the U.S. SO2 cap-and-trade program in the early 1990s. Enron's former CEO (and convicted felon) Jeffrey Skilling famously said "we are a green energy company, but the green stands for money."
Ontario is going down the same path.
But since the recession, the European carbon market has all but collapsed. By some estimates, the European Commission had issued €2.2 billion worth of excess carbon credits, essentially flooding the market and causing a huge price drop. The carbon price in Europe went from a high of €29.69 per ton to a current price of €5.17.
Ontario is going down the same path. The Environmental Commissioner of Ontario found that the government is handing out free carbon credits to industries that pump out 40 megatons of emissions, worth up to $720 million.
While preferred businesses get handed what is essentially free money by the government and financial speculators get rich, the rest of us will be paying about $400 per household more in 2017.
What Ontario doesn't need is a reverse Robin Hood who takes from hardworking families, but rather a reversal of the cap and trade policy that our so-called social justice premier has brought in.
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