Ontario outlines options for cap-and-trade scheme to reduce emissions

The credit system presented Friday aims to cut greenhouse gas emissions to 80 per cent below 1990 levels by 2050. Queen’s Park suggests some higher costs will be offset as clean energy becomes cheaper, but critics fear a government tax grab.

Thestar.com
Nov. 13, 2015
By Robert Benzie

Ontario consumers and businesses will soon have to pay for the carbon they burn.

As Premier Kathleen Wynne and the other premiers get set to join Prime Minister Justin Trudeau at the United Nations summit on climate change next month, Queen’s Park is designing its upcoming cap-and-trade system.

On Friday, the provincial government released a 66-page list of options for the scheme that discourages carbon emissions through a system of credits.

Businesses have greenhouse gas limits - or caps - and those coming in under theirs can sell or trade credits, creating an economic incentive to pollute less.

In time, an industry’s overall cap will be lowered in order to reduce pollution. This will presumably promote the use of greener energy sources.

Ultimately consumers will have to pay more to burn fossil fuels that contribute to global warming though cap-and-trade boosters say those higher costs could be offset by in the cost reduction of cleaner energy.

Still, critics have warned Wynne’s “carbon tax” is a cash-grab that will bring billions of dollars into a provincial treasury in desperate need of money.

Environment and Climate Change Minister Glen Murray’s department has shared the design options with more than 200 environmental and business stakeholders in hopes of getting feedback by Dec. 15.

That input will be incorporated in draft regulations to be tabled early next year in order to aim for Ontario’s goal of slashing emissions to 15 per cent below 1990 levels by 2020. It is hoped they can be 80 per cent below 1990 levels by 2050.

At that time, the government will finalize the timing for implementing the new measures, the scope of the program, including which industrial sectors will be affected, the regulations, enforcement, and penalties.

At last summer’s Climate Summit of the Americas, Wynne said Ontario would join with Quebec and California to expand North America’s largest carbon-pricing market.

“A cap and trade program will promote productivity and innovation to transition Ontario households and businesses to a low-carbon economy while reducing the risk of carbon leakage,” says the complicated new proposal.

“Reinvesting cap and trade auction proceeds in complementary measures can support the reduction of (greenhouse gas) emissions sufficient to meet the government’s targets,” it continues.

“This can be accomplished with made-in-Ontario reductions that assist Ontario households and business transition to the low carbon economy.”

The government promises that “Ontario will reduce the overall cost to households and businesses by investing in energy retrofits and low carbon transportation options.”

Conceding that introducing such an ambitious program will be challenging, the province is promising “simple, consistent, and efficient administrative systems” as it imposes a price on carbon.

What that price-tag will be and how the carbon market will operate is a key part of the government’s discussion paper.

The province is also concerned about “mitigating carbon leakage,” which is what happens if a business moves its production to a jurisdiction with more lax pollution standards to evade cap-and-trade rules.

“Investment of the proceeds (from pricing carbon) can promote productivity and transition to a low carbon economy while reducing the risk of carbon leakage,” the proposal said.

To curb an exodus of Ontario industries to places like Mexico, the plan suggests some “emissions-intensive” businesses be given pollution credits free of charge.