Ontario Spending CA$234 Million to Push Natural Gas into Rural Areas

Canada's province of Ontario is big—1.5 times the size of Texas. Ontario has so much low-carbon electricity, thanks to hydroelectric and nuclear power, that it often has to give it away. It has no natural gas. Yet the government has just announced it is spending $234 million Canadian dollar ($193 million) to deliver fossil gas to rural and remote communities.

The folksy Doug Ford, premier of Ontario, said in an online news conference: "Folks in rural, northern and Indigenous communities shouldn’t have to pay more simply to heat their homes." Instead, people in cities will pay a dollar a month more to subsidize them.

“We’re making good on our promise to deliver affordable energy and expand natural gas pipelines to more communities, while at the same time improving economic development and creating thousands of new jobs," said Ford in a press release.

The move is cheered by groups like the Ontario Federation of Agriculture (OFA) because they can heat greenhouses at a much lower cost, even though hothouse tomatoes grown in greenhouses heated with gas have a higher carbon footprint than chicken or cheese.

“Natural gas access is vital to farms and rural businesses, providing reliable, affordable energy options with the potential to drastically boost business opportunities by significantly lowering energy costs," said OFA president Peggy Brekveld in a statement.

It's cheered by homeowners and rural voters because gas is a lot cheaper than electricity. They will have to buy a furnace, but they could save about 30% of their heating costs at current gas prices.

The problem is electricity is expensive because of bad decisions made years ago, huge cost overruns when building the nuclear power plants, and the costs of retubing them now. Much of the electric bill is paying for "stranded assets," retiring the debt from these plants.

Natural gas is cheap because of fracking, and may not stay cheap forever. Spending all this money on gas infrastructure might only offer temporary relief in energy costs, while it locks everyone into fossil gas at a time when environmentalists say we should electrify everything.

Not only that, the government subsidy works out to CA$26,000 per customer—more than enough to insulate and seal a house so that it saves 30% of energy costs and is a lot more comfortable too.

Sarah Buchanan of Environmental Defence notes in a statement:

"This is a big subsidy for fossil fuels and a step in the wrong direction, when the government could have chosen to support clean technologies, help customers save money long term, lower capital costs, and cut carbon emissions. This per-customer subsidy would likely cover the entire cost of switching these customers to existing low carbon technologies, like geothermal and air-source heat pumps. Instead, even after the subsidy, customers will need to pay thousands of dollars out of pocket to switch to gas furnaces, and will lose out on new federal rebates for clean heating and cooling systems. Heat pumps are cheaper to operate and also provide air-conditioning and heating in one unit."

According to the Toronto Star, "Farmers, home and business owners have compared 'gasification' to the electrification of rural and remote areas more than a century ago."

The difference is that a century ago, Ontario had the largest publicly owned power authority in the world. It was created mainly by Adam Beck, who built huge, efficient water-powered generating facilities around the province. His slogan was "dona naturae pro populo sunt," which translated to "the gifts of nature are for the public." There wasn't much demand for electricity yet, so he was going to use much of that power to run an electric railway system from Buffalo up to Lake Simcoe. He had a true vision of the future, and it was all-electric.

Today, we have Ford spending a quarter of a billion bucks to lock people into fossil fuels. Many energy consultants are now describing gas infrastructure as the stranded assets of the future. Bloomberg notes: "The cost of renewables has dropped dramatically during the past decade, making gas-fired stations less competitive. Phasing out gas in power generation is just a first step. Cutting back use of the fuel in heating, transport and industry would wreak more potential damage."

Beck was accused of "irrational optimism," pushing streetcars at the start of the automobile age, and Ford is doing the same, pushing gas at the start of the new electric age.