Ontario to announce cap-and-trade for greenhouse gas emissions

The Globe and Mail reports that the Ontario government is about to announce plans to implement a cap-and-trade system for greenhouse gas emissions. Although the province signed an agreement with Quebec, B.C. and California in 2008 to tax carbon emissions, Ontario has yet to implement a program.

A cap-and-trade program means a government sets a threshold for large greenhouse gas emitters. Any industry or other organization that emits above the threshold has to buy permits from companies that emit less than their thresholds. The arrangements are set up using an auctioning system.

According to the article of April 2, 2016 by Adrian Morrow, Jane Taber and Sean Silcoff, the plans for Ontario’s cap-and-trade system are to link it with the existing trading systems of Quebec and California, creating a carbon market of 61 million people. Ontario’s move to price carbon would amount to Canada’s “single largest salvo in the battle against global warming,” and would “cover more than half of the nation’s economic output.”

Alberta has had a levy system for large greenhouse gas emitters since 2007 and was Canada’s first province to do so. British Columbia has had a simple carbon tax since 2008 whereby it adds a tax to every tonne of carbon burned.

Ontario’s choice of the more complex cap-and-trade system is said to be “the result of political and policy calculations for the government …” according to the authors of the  article. “It allows the government to set a hard cap on emissions—something that may prove necessary if the province is to meet its goal of cutting emissions to 15 per cent below 1990 levels in five years.”

So far Ontario has managed to reduce its greenhouse gas emissions by 6 per cent below 1990 levels.

Ontario’s Minister of Environment, Glen Murray, may announce the cap-and-trade program during an inter-provincial climate summit in Quebec City on April 13.

To see the article of April 2 in the Globe and Mail, click here.