TORONTO — Ottawa could give revenues from a federally imposed carbon tax directly back to Ontario residents instead of the provincial government if whoever is elected in the spring election rejects a carbon pricing system, the federal environment minister said Wednesday.
Catherine McKenna, who was in Toronto announcing funding for a green home-retrofit program, issued the warning in response to a question about Progressive Conservative Leader Doug Ford's plans to scrap Ontario's cap-and-trade system and reject a carbon tax.
"Let's be clear. Pollution isn't free," McKenna said. "If the federal government has to step in, the revenues will go back to the province but we will determine how they go back and we could give them back to people and businesses so they would not go to the government."
Ford responded to McKenna by reiterating his promises.
"The Ontario PCs will scrap (Liberal Premier) Kathleen Wynne's expensive cap-and-trade," he said in a statement. "We will also take the federal government all the way to the Supreme Court if we have to, if it means stopping this tax from being rammed down our province's throats."
Ottawa is allowing every province to create their own carbon-pricing system to meet federal requirements, but if those plans don't jibe with what it wants, legislation creates a system known as the federal backstop that will be imposed instead.
"Our climate plan has many elements to it," McKenna said. "But it also requires that you put a price on what you don't want, which is pollution."
McKenna's jabs at Ford's plans came as she announced $100 million in federal funds to enhance an Ontario program that offers rebates to make homes more energy efficient, bolstering the provincial Liberals' efforts to tackle climate change.
"We're creating good jobs through this program," McKenna said. "We're saving folks money and we're doing the right thing for our planet."
Wynne, who appeared alongside the minister, touted the announcement as an example of how her Liberal government's cap-and-trade proceeds, combined with the new federal cash, are being spent.
"This is how it works," she said. "There's actual support for people ... to make changes to their homes that are supported both by the federal and provincial governments."
Western University political science professor Cristine de Clercy said it's too early to tell if the brewing conflict over carbon pricing will amount to a full-blown dispute between the federal and provincial governments should Ford's Tories win the spring election.
It fits a well-worn pattern in both the last federal and provincial elections where parties from both levels were firing barbs at each other on the hustings, she said.
"Trying to forecast the nature of a Ottawa-Ontario throw-down on cap-and-trade at this point is an interesting exercise but we don't know what the feds are actually going to do," she said. "Are they serious about going around the provinces? We don't even know what the outcome of the Ontario election will be."
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Ontario's cap-and-trade program has raised $2.4 billion in proceeds since it began.
In December, Ontario's Liberal government introduced the green home-retrofit program that got a boost Wednesday, saying homeowners who complete energy-efficient renovations will be eligible for thousands of dollars in rebates.
The program offers up to a $7,200 rebate for new insulation, up to $5,000 for new windows, and up to $20,000 for new ground source heat pumps. In order to access the rebates, homeowners must hire a contractor who has been screened by the Green Ontario Fund.
The government has said buildings generate nearly a quarter of the province's greenhouse gas emissions.
Ontario has pledged to cut greenhouse gas pollution to 15 per cent below 1990 levels by 2020, 37 per cent by 2030 and 80 per cent by 2050.