Energy, auto sectors raise red flags over Ontario climate plan

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Ontario's energy and auto industries say they were surprised by the province's ambitious plan to slash greenhouse gases, warning that it will drive up home heating costs by as much as $3,000 for homeowners, and that auto makers will not produce enough electric cars to meet its targets.

Environmentalists, meanwhile, say the blueprint puts the province in the vanguard of the battle against climate change, outpacing every other province but Quebec.

The Liberal government's $7-billion Climate Change Action Plan, scheduled for release in June but obtained this week by The Globe and Mail, promises to start phasing out natural gas for home heating. This will be done partly through incentives for owners of homes and buildings to install geothermal and solar heating, and partly by changes to the building code mandating that, by 2030, all new houses and small buildings be heated by something other than fossil fuels. Natural gas currently provides 76 per cent of the province's heat.

The plan also promises hefty subsidies for electric vehicles, more charging stations and sets ambitious targets of raising the number of electric vehicles sold to 12 per cent of the total by 2025; at the moment, just 0.16 per cent of the vehicles on the road in Ontario are electric.

"The nature of how we heat and cool our homes, the technology in our vehicles, the application of information technology – the pace of change is going to be enormous," Environment Minister Glen Murray said on Tuesday. "And what I've tried to say is we're all going to have to step up."

But the province's gas industry warns that, based on current prices, switching to electric heat would cost homeowners between $2,000 and $3,000 extra annually. The industry is particularly concerned about the planned changes to the building code that would kick natural gas out of new homes by the end of the next decade.

"It's prescriptive; it removes the choice of consumers to be able to determine which source of heat they're going to use," Union Gas spokeswoman Andrea Stass said.

And for homes that switch to electric heat without installing geothermal or solar, the province would have to significantly expand the electricity grid with more power generation and new transmission lines – an expensive proposition.

"Electrifying building heat, and needing it in the winter months, would mean that you would have to build a lot of generation, transmission and distribution just to handle what natural gas provides very affordably today," said Malini Giridhar, vice-president of business development at Enbridge.

The plan is not all bad for the industry, however: Another section promises to help trucking companies switch to liquified natural gas, which burns cleaner than diesel. A section mandating a higher content of renewable gas, such as from waste, got high marks from gas companies.

Joe Vaccaro, chief executive officer of the Ontario Homebuilders Association, said it will be a challenge to eliminate natural gas, but much depends on how much help government provides.

"Do I believe it's possible? With enough government support and incentives it's possible," Mr. Vaccaro said. "Do I believe it's likely? I think it's going to be a challenge considering the massive natural gas infrastructure already in place."

Senior auto industry executives and analysts said the province's electric vehicle targets will be impossible to meet. Getting to 12 per cent by 2025 would mean sales of more than 100,000 electric vehicles annually, assuming overall sales reach 900,000 vehicles by 2025.

"The province is still proposing to meet its 2025 carbon reduction targets in part by forcing Ontarians to pay themselves subsidies to buy electric vehicles that won't actually exist," said Flavio Volpe, president of the Automotive Parts Manufacturers Association of Canada.

The electric vehicle incentives – including $14,000 rebates, removing the provincial portion of the sales tax on electric vehicles and offering free charging – will not address one of the key problems that is keeping consumers cautious, industry analyst Dennis DesRosiers said: They do not travel far enough on a single charge to displace vehicles powered by internal combustion.

Several auto industry sources said the government had not consulted them before assembling the plan.

On the environmental front, however, the plan is a quantum leap forward for the province. While many jurisdictions have set targets for reducing greenhouse gas emissions, most have not actually laid out a road map for getting there, said Sarah Petrevan, a policy adviser at Clean Energy Canada. In Canada, only Quebec has anything similar.

"In the sense that Ontario's actually got a plan to hit a target, they actually remain fairly unique in this space," she said. "Ontario is in a bit of a leadership role in the country."

Keith Stewart of Greenpeace said the plan takes Ontario from simply cutting emissions to actually trying to build a low-carbon society.

"The government seems to be wrapping its head around what it will take to get off of fossil fuels, rather than to simply reduce greenhouse gases a bit. I've read a lot of Canadian climate plans, and this is the first I've seen that begins to wrestle with that challenge," he wrote in an e-mail.

Some environmentalists, however, pointed to flaws in the plan. For one, much of the $7-billion will be allocated by the government rather than by the sort of arms-length bodies that exist in California and some European jurisdictions – a possible recipe for political interference.

"If there's one thing that's lacking from Ontario's plan, it's that kind of third-party solutions-provider who is not government, who is external to the plan. That's what you have in the really top-notch jurisdictions," said Keith Brooks of Environmental Defence.

However, Mr. Brooks gave the plan high marks overall. The disruptive change it seeks to achieve, he said, is not a bad thing.

"There may be some disruption, for sure, but you can't really address climate change and not do things differently," he said. "You have to get off fossil fuels, and that means reducing, ultimately, to the point where we use zero natural gas and zero gasoline. There may be losers, but there are going to be a lot of winners too."