In the ever-evolving landscape of energy planning and infrastructure development, Ontario is at a critical juncture. The Development Charges Act tries to ensure that growth pays for growth and that the property tax base doesn’t have to subsidize the costs of bringing infrastructure to new developments. However, the principle of growth paying for growth doesn’t apply to fossil fuel infrastructure. When it comes to fossil fuel infrastructure in new developments, it’s the rate base that pays for bringing in new fossil fuel pipelines.
In new developments across Ontario, the installation of fossil fuel pipelines is not financed by the developers but by the ratepayers—a cost that these ratepayers might unknowingly bear for decades. This financial model raises significant concerns, especially considering the Ontario Energy Board’s (OEB) recent acknowledgment that such investments may not be viable in the longer term. The OEB highlighted a reality: the payback period of these pipelines (typically 40 years) extends well beyond the period during which we should cease using fossil fuels for heating and transition towards electrification to meet our national climate commitments.
The energy planning horizon should include a range of lower carbon options such as hybrid systems combining Air Source Heat Pumps (ASHP) and fossil fuel backups, all-electric solutions, geo-exchange systems, or neighbourhood-scale waste heat recovery. These alternatives should be evaluated for their economic and environmental impacts to guide development decisions. Unfortunately, the incentive to invest in these greener alternatives diminishes when developers receive fossil fuel infrastructure at no direct cost.
Amidst this backdrop, the Province of Ontario introduced Bill 165, a controversial piece of legislation that cements the province’s dependency on fossil fuels. The Bill effectively signals to Enbridge, a major player in the fossil fuel industry with gross annual profits soaring above $16 billion in recent years, that it can proceed without concern for the financial risks associated with potentially obsolete assets. This move not only undermines progressive energy planning but also places an enormous financial burden—exceeding $1.5 billion—on the shoulders of ratepayers for infrastructure that may soon become stranded assets as the market moves towards other low carbon energy options.
The implications of Bill 165 are profound. By safeguarding Enbridge’s profits and ensuring the continuation of fossil fuel infrastructure development, the Bill disregards cheaper, more sustainable energy alternatives available now, such as heat pumps, geo-exchange systems and more. The real price of many recent energy decisions taken by the Ontario government today- be it this fossil fuel infrastructure subsidy, doubling down on gas plants for electricity generation, or the natural gas expansion program will be paid for by our future generations.
As Ontario continues to grapple with these critical decisions, the need for a forward-thinking, equitable approach to energy planning has never been more urgent. The recent decision by the OEB to eliminate fossil fuel subsidies represented a significant step towards aligning Ontario’s energy policies with environmental sustainability and fiscal responsibility. Unfortunately, Bill 165 reverses this progress, prioritizing short-term gains for a fossil fuel monopoly over the long-term welfare of its communities and the planet.
It is time for Ontario to reassess its priorities and choose a path that leads to economic growth and environmental sustainability. The decisions we make today will define the energy landscape for future generations. We must choose a path that benefits all Ontarians, not just the profit margins of fossil fuel companies.
For further insights into the implications of Bill 165 and the broader conversation around fossil fuel subsidies in Ontario, resources such as the Clean Air Council and CAP submissions provide valuable information and advocacy perspectives.
By Gaby Kalapos, Executive Director