Ontario Rolls Out Cap-and-trade Details Ahead of Paris Conference

Industrial Steam at Night

By Jonny Wakefield

November 19, 2015

Ontario has rolled out plans for a cap-and-trade system that would put a price on carbon. 

Last week, the Ontario government released an outline of the province’s plan to reduce greenhouse-gas emissions to 15 per cent below 1990 levels by 2020.

According to the document, the cap-and-trade scheme will have to start by Jan. 1, 2017 and the limit on emissions will have to decrease by 3.7 per cent each year to reach the 2020 target.

Emitters that produce 25,000 tonnes of greenhouse-gas emissions or more each year would be able to buy carbon allowances that they can 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 Quebec’s, which is formally linked to California’s as part of the Western Climate Initiative.

Quebec’s emissions cap is set 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 is currently the second-highest carbon emitter in Canada, behind Alberta, but it hopes to reduce emissions to 80 per cent 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, argue cap and trade will not hurt the economy.

Ontario Premier Kathleen Wynne will be among the leaders to join Prime Minister Justin Trudeau at the COP21 climate conference in Paris at the end of the month. Trudeau has said he will work with the provinces to develop emissions targets within 90 days of the meeting.