March 5, 2010
Ontario’s strategy of picking winners likely to fail.
Ontario’s provincial auditor or other independent groups should periodically audit the programs and subsidies being offered through the recently passed Green Energy Act to ensure the programs are producing the promised environmental and economic benefits, says an Energy Probe report published today by Michael Trebilcock, Professor of Law and Economics at the University of Toronto, and James Wilson, a recent University of Toronto Law School Graduate.
The report argues that top-down government policies are often incapable of “picking winners.” As a result, the government should be audited to ensure that it is pursuing the best and most economic policies in regards to cost per ton of carbon abated and cost per net job created.
If the real motive behind the Green Energy Act is to cut emissions and create “green” jobs, the report says, providing technology-specific subsidies runs a high risk of failure. The report highlights a number of examples—such as wind energy and corn-based ethanol—where the promised environmental and economic benefits were either far less than expected, or nonexistent.
Instead, the authors argue, the government should pursue a “winner neutral” policy that focuses on investments in an array of energy technologies from a number of market actors.
“Governments have a terrible track record of picking winners,” says lead author Michael Trebilcock. “Many of the decisions being made in regards to recent ‘green’ legislation may be more for political reasons, rather than the declared environmental and economic ones.”
For more information, contact Professor Michael Trebilcock at 416-978-5843 or 519-922-1257.