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| 11/19/15

Ontario unveils cap-and-trade plans

TCE

Ontario has rolled out plans for a carbon trading scheme first promised in the spring, as a main element in the province’s plan to reduce greenhouse-gas emissions to 15 per cent below 1990 levels by 2020.

According to the document being circulated for comment among business and industry leaders, the cap-and-trade system is to be formally launched by 1 January, 2017. The ‘cap’ part of the scheme involves the legislation of an upper limit on the greenhouse gases (GHGs) that can be emitted in the province, a limit that will then have to decrease by 3.7 per cent each year to reach the 2020 target.

Industrial or institutional sources that produce upwards of 25,000 tonnes each year would be able to buy carbon allowances that they can then sell if they produce less than their emissions cap. The first auction of allowances would take place in March 2017.

Ontario plans to link its cap-and-trade system with that of Quebec, which is itself formally linked to California’s carbon trading scheme.

Quebec’s emissions cap is to decrease between 3.2 and 3.7 per cent a year between 2015 and 2020, while California’s will decline between 3.1 and 3.5 per cent.

Ontario, Canada’s industrial powerhouse, is currently the second-highest carbon emitter in the country, behind Alberta, but it hopes to reduce emissions to 80 percent below 1990 levels by 2050. And its emissions are already on a downward trend, according to Environment Canada. Emissions in Ontario fell below 1990 levels in 2013, largely due to the phase-out of coal plants and a decline in manufacturing.

The opposition Progressive Conservatives have called the Ontario proposal a “tax on everything,” saying cap-and-trade costs would be passed on to consumers and cause businesses to flee the province.

However, some business groups, including the 80-member Clean Economy Alliance, support carbon pricing through cap and trade, saying reducing carbon pollution means more jobs and new business opportunities.

British Columbia for its part has opted for a tax on carbon as its flagship emissions reduction policy, rather than cap-and-trade. South of the border, while California has also opted for carbon-trading, at the federal level, carbon trading legislation failed to pass the US Congress in 2009, and so the Obama has opted for straightforward command-and-control regulation of greenhouse gas emissions. There is an ongoing debate within Canada and indeed around the world as to which of the three approaches provides the fastest, most effective and cheapest route to emissions reduction.

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