Ford government sitting on $1B in cap-and-trade money

As much as $1 billion in Ontario's cap-and-trade fund is sitting unspent, and questions are swirling about what Premier Doug Ford's government is going to do with it.

Environmental commissioner says by law it can only be spent on reducing greenhouse gases

Ontario has as much as $1 billion in its coffers from cap-and-trade auctions. The province's environmental commissioner is warning the Ford government that it must spend the money on reducing carbon emissions. (J.P. Moczulski/Reuters)

As much as $1 billion in Ontario's cap-and-trade fund is sitting unspent, and questions are swirling about what Premier Doug Ford's government will do with it. 

The money was brought into provincial coffers under a law that says it can only be spent on measures that reduce greenhouse gas emissions. However, Ford has dismissed the money as a "slush fund," and his government is pushing forward legislation to use some of it to cover the costs of cancelling the cap-and-trade program. 

The dedicated fund for reducing greenhouse gases had a balance of $553 million at the end of March, when the last fiscal year ended, according to the province's newly released public accounts. Another $476 million was added in May from the final cap-and-trade auction of carbon allowances, before Ford's PCs won the election and quickly scrapped the Liberals' climate-change plan.

That would put the account at more than $1 billion. What remains unclear is how much of that has been spent in the past six months, and how much will be used to wind up cap-and-trade.

CBC News asked the Environment Ministry for the current balance of the greenhouse gas fund, but officials did not provide an answer. 

Environment Minister Rod Phillips, centre, with Transportation Minister John Yakabuski, left, and Premier Doug Ford. (CBC)

Ontario's environmental commissioner Dianne Saxe believes there's still $1 billion in the account because she has seen no evidence that money has been dispersed since the end of March. 

Saxe — an independent officer of the Legislature like the auditor general and ombudsman — says the costs of winding up cap-and-trade ought to be small enough that the bulk of the $1 billion will remain. 

"They will have quite a bit of money left," said Saxe in an interview. "That can be money they can use to invest in [climate-change] solutions." 

She is warning the government that it cannot spend the money however it wishes, but only on initiatives to reduce carbon emissions. "That was the legal basis on which the money was collected, and that remains the law," she said.

Liberal MPP Nathalie Des Rosiers said Monday she fears the government will not spend the money on cutting greenhouse gases but on lawsuits arising from cancelling cap-and-trade.  

That fear is unfounded, said Environment Minister Rod Phillips. 

Within days of taking power, the Ford government ended rebates to homeowners for making energy efficiency improvements, such as installing smart thermostats. (Eric Risberg/Associated Press)

"The money will be used for the purpose it was collected," said Phillips in an interview Monday at Queen's Park. 

He declined to estimate how much of the $1 billion will remain in the fund once the cap-and-trade program is wound up. Nor did he agree that the figure will be in the hundreds of millions of dollars. 

"I don't think it would be fair to speculate at this point," said Phillips. "We will make it clear how much money was spent and where it was spent."  

Ford made cancelling the cap-and-trade program a central election promise, calling it the "cap-and-trade carbon tax" during and after the campaign. Within days of taking power, his government shut down rebates to homeowners for making energy efficiency improvements, such as installing new windows, and ended rebates for buying electric cars. Those rebates came from the greenhouse gas reduction fund.

The government won't be able to say how much remains in the greenhouse gas fund until all the programs wind up, said Phillips. He also said the government is allocating $5 million to compensate companies that bought cap-and-trade allowances, which are now worthless. 

Phillips is promising a plan to tackle climate change this fall, including an "emissions-reductions fund" but says it will not come from a carbon-tax model.

The province is challenging Ottawa in court over the Trudeau government's plan to impose a carbon tax on Ontario in the absence of a provincial carbon-pricing program. 

Meanwhile, environmental groups led by Greenpeace are suing the province over cancelling cap-and-trade, alleging that the Ford government broke the law by failing to consult Ontarians on the move.

About the Author

Mike Crawley

Provincial Affairs Reporter

Mike Crawley is provincial affairs reporter in Ontario for CBC News. He has won awards for his reporting on the eHealth spending scandal and flaws in Ontario's welfare-payment computer system. Before joining the CBC in 2005, Mike filed stories from 19 countries in Africa as a freelance journalist and worked as a newspaper reporter in B.C. Follow him on Twitter @CBCQueensPark