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In Depth

| 06/27/18

Ontario to nix raft of climate policies, from cap and trade to retrofits


The incoming Doug Ford government is bringing a halt to cap and trade, electric vehicle rebates, and home retrofits. Even cycling infrastructure is likely to lose out.

The incoming premier of Ontario has said he intends to end the province’s greenhouse gas cap-and-trade program as his new government’s first order of business. The move has already had knock-on effects in other areas of climate policy beyond Canada.

Progressive Conservative leader Doug Ford’s team is due to take office on June 29. He is then expected to announce “clear rules” to initiate an “orderly wind down” of the multi-billion operation that is tied to similar systems in California and neighbouring Québec.

Both California and Québec acted swiftly to close access by Ontario firms holding emissions allowances to their jointly operated cap-and-trade market in order to prevent them from dumping almost $3 billion in such credits on the system. Had they not acted, a sell-off of the credits could have resulted in an oversupply, depressing auction prices.

Despite the set-back in Ontario, Québec environment minister Isabelle Melançon added that her province would continue discussions with France about linking up the cap-and-trade system with the European Union’s emissions trading scheme.

Responding to Ford’s announcement, Canadian Prime Minister Justin Trudeau told reporters that he was disappointed at the news. He added that Ottawa considered the move not merely as closing down the cap-and-trade system but as “effectively withdrawing” from the national climate plan, the Pan-Canadian Framework on Clean Growth and Climate Change.

Under the framework, Ottawa will unilaterally impose a carbon tax on any province that does not adopt some form of carbon pricing, either via cap and trade or a carbon tax, as British Columbia embraced in 2008.

Ironically, under Ontario’s cap-and-trade system, businesses affected by the program would have paid a lower rate than in those jurisdictions with a carbon tax. Under the Pan-Canadian Framework, a carbon tax applied a levy of $20 per tonne in January of this year, set to rise to $50 per tonne in 2022. The current carbon price reflected in the Ontario emissions trading program was predicted to hit just $25 per tonne by 2022 due to the access to California.

Canadian environment minister Catherine McKenna warned the incoming Ford administration on Twitter and Facebook that Ottawa was mulling over directing funds raised from any imposed carbon tax directly back to Ontario residents to spend as they wished rather than passing on the revenues to Queen’s Park.

Ford also said that his government would be joining Saskatchewan’s lawsuit against the federal government over its constitutional ability to impose a carbon tax on a province. Saskatchewan is currently the only province that is not a signatory to the framework.

The Ontario cap-and-trade system currently funds a raft of climate initiatives through a provincial agency called the Green Ontario Fund that are also set to be shuttered. Rebates for energy efficiency home and commercial renovations have been cancelled, including for heat pumps, smart thermostats, insulation, solar panels, retrofits for social housing, schools and hospitals. Monies allocated for cycling infrastructure and public transport are also likely to lose out.

The government is also set to eliminate rebates for households purchasing electric or hydrogen-powered vehicles, and installing home charging systems, although no date has yet been set for the move.

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