Published on: 14/04/2015

On April 13, Premier Kathleen Wynne announced a new cap and trade system in Ontario to limit greenhouse gas (GHG) emissions in the province. The objective of this new system is twofold: to reduce the provincial carbon footprint as part of the national carbon reduction goals; and, to jump start a new market for inter- and intra-provincial carbon trading.

Precise details of the program are still vague, however based on other emissions trading systems (ETS) in Quebec and California, it can be presumed that the province will auction or sell a specified number of emissions permits to major commercial emitters of carbon. Companies that want to emit more carbon will be able to buy credits on a secondary market from those who are able to reduce their carbon footprint. The Government has indicated that any revenue raised from the ETS will be re-invested in green technologies and infrastructure (i.e. transit).

Because carbon and other GHGs are embedded throughout the economy, everyone will share the cost of the cap-and-trade program. The cost will show up in the price of energy and energy-intensive goods and services. The exact increase in various product prices is uncertain, as it will depend on a few factors, such as the market price of allowances and the ability of regulated sources to pass the price of allowances on to consumers.

A cap and trade system has been in the works since 2009 when the province passed the enabling legislation to develop it. Initial estimates indicate that an ETS in Ontario could raise between $1 billion and $2 billion per year in provincial revenue.

If you have any questions or concerns with this MTO proposal, please contact Patrick McManus (905-629-7766 ext. 222 or patrick.mcmanus@oswca.org).

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