Ontario to Offer E-Car Rebates in $6.5 Billion Carbon Plan

Ontario will spend as much as C$8.3 billion ($6.5 billion) through 2020 to reduce its greenhouse gas emissions, betting big on electric vehicles with rebates of as much as C$14,000 a car and 500 charging stations to spur sales.

The province’s climate-change plan relies on revenue from a new cap-and-trade system that will generate C$1.8 billion to C$1.9 billion a year, which will be “recycled” to pay for the vehicle rebates, as well incentives for lower-pollution building construction and retrofitting apartment buildings to save energy. The money will go into a fund that will be administered separately from general tax revenue, Premier Kathleen Wynne said in a briefing in Toronto on Wednesday.

“We are committed to creating a low-carbon economy that will drive innovation, create more opportunities for business and industry,” Wynne said.

The green push is a cornerstone of Wynne’s Liberal government as a sluggish manufacturing industry, government asset sales and rising debt make Ontario the most indebted sub-sovereign government in the world as rated by Moody’s. Wynne promises the climate plan will cost households only C$13 a month, and will eventually lower costs for consumers as the expenses associated with pollution rise, she said.

Charging Stations

The premier is aiming to cut emissions in Canada’s most populous province by 15 percent by 2020 from 1990 levels, and 37 percent by 2030. At the same time, she’s projecting a balanced budget in the 2017-2018 fiscal year, characterizing climate spending as an “investment.”

The electric car rebates will push sales to about 5 percent by or about 14,000 cars and trucks by about 2020 from a total of 284,000 sold in the province last year, according to the plan. In addition, Ontario will cut emissions from vehicles by increasing the use of low-carbon fuel such as propane and gasoline with higher renewable fuel content. Some 500 charging stations will be built over the next year.

The shift toward electric cars isn’t big enough, said Atif Kubursi, professor emeritus at McMaster University’s economics department who recently published a study about the electric car industry. There needs to be a concerted effort to build charging stations, train electricians, and create a supply chain for things like batteries, Kubursi said. “I don’t think the industry is ready.”

Provincial Plans

The province studied similar energy-rebate plans in Vermont and New York, Environment Minister Glen Murray said at the briefing. The government also is revamping the building code to require buildings that emit no carbon, he said.

Natural gas will remain an “essential” energy source for the province as it makes a transition to a low-carbon economy, Wynne said.

Ontario was long Canada’s economic engine, though its manufacturing sector was hit hard in the 2008-2009 financial crisis. As Canada’s oil-producing regions have been shaken by a commodities slump, Canada’s dollar has weakened and Ontario is rebounding.

Canada’s four most populous provinces -- representing 86 percent of the country’s population -- now have, or are introducing, either a carbon tax or a cap-and-trade program aimed at reducing emissions. Prime Minister Justin Trudeau’s government is pressing for a more co-ordinated national emissions reduction effort, and has sidestepped questions of whether he would unilaterally impose a minimum national carbon price amid opposition from some provinces. Wynne said this month she didn’t expect him to.

Ontario closed its final coal plant in 2014, a move that has led both to a drop in levels of certain toxic greenhouse gases -- like nitrogen dioxide and sulfur dioxide -- and increased power costs. Ontario’s base power rate last month was 2.5 times the rate of a decade earlier, with the Ontario Chamber of Commerce having warned the prices are hurting private sector growth and hiring.

To contact the reporters on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net, Josh Wingrove in Ottawa at jwingrove4@bloomberg.net. To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net, Jacqueline Thorpe, Stephen Wicary