Business impact from cap and trade a matter of wait and see

While many businesses are waiting to see what carbon pricing will mean to their bottom line, others are already adapting to Ontario's new cap and trade system.

See which northern industries are the largest emitters of carbon dioxide

Lockerby Taxi co-owner Sharon Flinn shows off the company's new compressed gas pump, part of its plan to switch all 44 cabs off gasoline. (Erik White/CBC )

While many businesses are waiting to see what carbon pricing will mean to their bottom line, others are already adapting to Ontario's new cap and trade system.

Sharon Flinn, co-owner of Lockerby Taxi in Sudbury, is hoping to avoid a spike in fuel costs, which already account for 55 per cent of her budget.

So, she is switching her fleet of 44 taxi cabs over to compressed natural gas, which emits only water vapour and she says costs a third of the price of gasoline, especially now that it's going up 4.3 cents a litre thanks to cap and trade.

"Serious dent in the bottom line of our business and a serious dent in any business that's dependent on transportation," says Flinn.

Currently three taxis have been converted to burning compressed gas at a cost of about $4,000 per vehicle and she's also installed a new pump at their south end headquarters.

Flinn is hoping that pump might bring in some extra revenue with no service stations in northern Ontario serving compressed gas cars and trucks and she's also hoping she might get some cap and trade credits she can sell to companies who can't meet their targets.

Essar Steel in Sault Ste. Marie is the largest carbon dioxide emitter in northern Ontario and the third largest in the province. (CBC)

Cap and trade took effect Jan. 1, but many big polluters in the north won't have to pay for their carbon emissions for a few years.

That includes Essar Steel in Sault Ste. Marie, the largest carbon emitter in the north and third largest in the province.

Company spokesperson Brenda Stenta says because steel has been deemed an "energy-intensive, export-reliant" industry, the government has given Essar three years worth of free allowances, meaning it won't have to buy credits until 2020.

But she says it will be difficult to cut back on carbon since most emissions come from the chemical reaction when steel is made.

"So until such time as there's breakthrough technology in the industry, we're severely limited in how many reductions we can achieve," says Stenta, noting that the steel mill has decreased its emissions by 18 per cent since 1993.

There are about 15 large emitters in the northeast with over 25,000 tonnes of carbon dioxide who fall under the new cap and trade regulations.

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The Carmeuse lime plant near Blind River also has three years of allowances before cap and trade eats into its profits.

The company's environmental lawyer, Joe Freudenberg, says cutting their carbon output will be tough since the process of turning limestone into powdered lime with kilns involves the creation of carbon gas.

"Inherently the chemical reaction includes the emissions of carbon dioxide. That's something we simply cannot change," says Freudenberg, whose company's Blind River operation employs about 28 people.

There is a lot of wait and see when it comes to cap and trade.

And Toronto-based consultant Livio Nichilo, whose firm Internat Energy Solutions helps businesses prepare for the carbon pricing world, says Ontario learned from other cap and trade jurisdictions that it's better to ease into the change.

"Once we have a chance to see what opportunities it brings, then it will be a lot easier to make some predictions in terms of what emission reduction we're going to see, how fast they might come about, price markers in terms of where the market might go," says Nichilo.

"These are all the things for the first year we're definitely going to be keeping an eye on."