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Was the Ontario government’s Speech from the Throne useful?  The media certainly seemed to like the idea that the government was planning to give a rebate on electricity prices.  It will make consumers happy, regardless of whether that consumer is a single parent struggling to raise children or a large property owner (where a 1 percent change could mean millions of dollars).  But what does it all mean?

It should be obvious that the rebate policy is reversing some of the effects of other government policies.  It is also true that the rebate will affect the government’s finances, and its deficit.  Therefore, to some extent, the new policy is a bit of misdirection: the problems remain but in a new disguise.

If you think about it, prices are a means to an end.  There are more important concerns.

If the goal was to lower prices, the Ontario government could lower prices even more with a larger rebate funded by taxes.  Arithmetically, it is simple.  It has been used by many governments in many countries.  A bigger subsidy would be more popular politically, temporarily.  So, what is the problem which should be addressed?

It is important to remember that the high electricity prices, plus the effects of the cap-and-trade policy (which will be introduced in the near future) were part of a policy intended to encourage sustainability.

Simple solutions are usually too simple because they overlook aspects that do not fit neatly into a 500- 1000 word media report or into 140 characters.  We at GREG consider these issues in more detail and are happy to discuss them with anybody who is interested (e.g. students, partners, as well as the media).

One of the members of GREG, Avis Devine, was the subject of two long interviews which explored the issue of sustainable real estate [1] [2].  Her recent research (which included data from Canada) is part of a growing body of research which shows that it can be profitable to do good.  Yes, there may be costs but profit is always equal to Revenue Minus Cost.  Her research shows that enough tenants are willing to pay more for sustainability.  And, like much in real estate, it is important to pay attention because the numbers are large.

“Net Zero” homes is another piece of this puzzle, which has been in the news recently [1] [2].  This initiative intends to establish a business case when building new homes.  As with many other choices, the real question is to compare the price paid now with the price to be paid in the future.  To overcome the natural reluctance to pay more now, Reid’s Heritage Homes (a friend of the REH program) uses the marketing line that being energy efficient is like “prepaying your electricity bills”.

So, do not be distracted by prices and rebates, especially in the context of real estate.  To paraphrase Dermot Sweeney (another friend of the program): low prices encourage people to be inefficient.  By definition, waste is not part of a sustainable solution.

PA

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