Tom Adams
Letter to John Hutchinson
August 30, 2001

John Hutchinson, Senior Policy Advisor
Air Policy and Climate Change
4th Floor, 135 St. Clair Avenue West
Toronto, Ontario, M4V 1P5

re. Comments on EBR Registry Number RA01E00020

Dear Sir,

Energy Probe has reviewed the above noted registry and makes the following comments.

Due to its reliance on forecast-based emission reductions instead of quantified actual emissions, as well as off-sets, credits, and banking the proposed air emissions policies are likely to lead to no improvement or a deterioration in the annual loadings of our airshed from emissions related to the electricity sector. Special treatment for fossil-fired generating facilities currently controlled by the government’s own generation company, will give OPG substantial market power in the emission credit market, thereby undermining competition. In these two respects, the proposed policy contradicts the government’s promises in the 1997 White Paper on electricity restructuring.

Energy Probe regrets that the government has ignored the advice of the Market Design Committee when it set out a legitimate emission trading regime based not on forecast-based emission reductions but on quantified actual emissions by capped entities. The MDC’s proposal was unanimously accepted by the members of the committee.

The proposed policy is inconsistent with the efforts of the U.S. EPA to manage downward air emissions in the United States. Until Ontario’s emission trading rules are harmonized with the U.S., the full potential of international trade in electricity may not be realized.

The policy is excessively reliant on bureaucratic discretion, thereby creating an atmosphere of uncertainty.

The proposed policy demonstrates the corrosive effect of conflicting interests within the Ontario government. Potential investors in fossil-fired generating assets in Ontario should realize that the proposed emission regulations are unlikely to withstand sustained scrutiny by the public downwind of this policy.

Sincerely,

Tom Adams
Executive Director