Ontario launches six-month carbon market consultation

Published 15:02 on April 13, 2015  /  Last updated at 17:12 on April 13, 2015  /  Americas, Canada

Ontario on Monday kicked off a six-month consultation process over how it will design a cap-and-trade scheme to link with California and neighbouring Quebec's combined carbon market.

Ontario on Monday kicked off a six-month consultation process over how it will design a cap-and-trade scheme to link with California and neighbouring Quebec’s combined carbon market.

Kathleen Wynne, premier of Canada’s most populous province, said the government would work with industry and green groups to design the scheme and link it to the Western Climate Initiative (WCI), North America’s biggest emissions trading market.

She added the government would aim to publish its market design in October, and that any revenues raised through allowance sales would be reinvested in carbon-cutting initiatives such as curbing transport emissions and retrofitting buildings to be more energy efficient.

Wynne said Ontario would try to learn from other countries and regions that already have carbon markets, but said that her province would “write its own narrative”.

“We’re going into a design phase, so if you want to know what happens, look at California and Quebec,” she said, adding that initial studies found that the plan could raise Ontario gasoline prices by 2.5-3 cents/litre, implying that road transportation would be included along with the energy and industrial sectors.

“It would be irresponsible of us to speculate what the costs are going to be when we’re still working with industry on designing this,” she told reporters.

An Ontario cap-and-trade scheme would mean that 75% of Canadians will live in a province with some form of carbon pricing.

Ontario emits 166 million tonnes of CO2 equivalent per year, with transport (57 mt), industry (50 mt) and buildings (29 mt) as the biggest-emitting sectors.

Ontario Energy and Climate Change Minister Glen Murray said the province will in the coming year set interim targets en route to a goal to cut emissions by 80% below 1990 levels by 2050.

Ontario has a 2020 target of -15% below 1990 levels, but by 2012 its emissions were down only 5.9%.

The province, which already has a cap-and-trade scheme for NOx and SOx pollution, last year completed its phase-out of coal-fired power.


Ontario’s announcement also forms part of a push by provinces to take the lead on climate change in the absence of leadership from the Canadian federal government.

“Ottawa is not engaging, and it’s unclear what they intend to do. Sub-nationals are willing to step up and take action,” Wynne said.

Provinces will meet for a climate change summit in Quebec City on Tuesday to discuss how they can work together on the climate issue ahead of this year’s UN talks in Paris.

Ontario also announced it will host a Climate Summit of the Americas from July 7-9, which will bring together pan-American jurisdictions, environmental groups, and industry, to work towards cutting CO2 through broader adoption of carbon pricing mechanisms.

Canadian Prime Minister Stephen Harper last week said Canada will publish its INDC before G7 meetings in June, some three months after the Mar. 31 target date for countries to submit their CO2 reduction plan to the UN.

But he and the federal ministers for natural resources and the environment have all come out recently against putting a price on carbon, challenging the plans of Wynne and Justin Trudeau – head of Canada’s opposition Liberal party – who in February proposed setting up a similar plan to that of the US President Obama of setting national targets and giving provinces the flexibility to design their own plans to meet them.

According to local media, Canada’s environment minister last week requested that the provinces provide more details to the federal government on how they plan to meet their 2020 emissions goals – targets that she pointed out will be missed by most of them.

By Mike Szabo – mike@carbon-pulse.com