Doug Ford is officially ending Ontario's cap-and-trade plan, but what's next?

Ontario Premier Doug Ford officially announces plans to kill the province’s cap-and-trade program, leaving unanswered questions about how much it will cost and whether the federal government will now levy its own carbon tax.

Move opens door to federal government implementing its own carbon tax in Ontario

Ontario Premier Doug Ford on Tuesday announced formal plans to end the province's cap-and-trade program, saying the measure was nothing more than a government cash grab that didn't help the environment. (Tijana Martin/Canadian Press)

Ontario Premier Doug Ford officially announced plans Tuesday to end the province's cap-and-trade program, drawing scorn from the federal government which may soon implement its own carbon tax in the province.

The PC Party won a majority government after campaigning on axing cap-and-trade, which forced large companies to buy allowances for their carbon emissions. Ford says in a new release that eliminating it will be the first step in lowering gas prices by 10 cents a litre and curbing other household costs.

Ford also took aim at carbon taxes in general, calling them "no more than government cash grabs that do nothing for the environment."

"We are getting Ontario out of the carbon tax business," he said.

It remains unclear how much exiting the cap-and-trade program will cost Ontario, which is part of a larger program with Quebec and California, and what will happen with the nearly $3 billion in credits that companies have already purchased.

CBC Toronto requested that cost from the Ontario Ministry of Environment and Climate Change last week, but the request was referred to Ford's office.

Ford's news release also said there will be an "orderly wind-down" of programs funded by cap-and-trade, including incentives for homeowners to make their homes more energy efficient and for motorists to switch to electric vehicles.

Ford's statement says the government will decide on a case-by-case basis whether some initiatives previously funded by the program will be paid for using tax base revenue.

Will Ottawa step in?

A statement from the office of federal Environment Minister Catherine McKenna criticizes Ford's move. (Nathan Denette/Canadian Press)

The change at Queen's Park will have major ramifications for the federal government, which plans to implement a carbon tax in provinces where there is none. On Tuesday afternoon, the federal government was already criticizing the change in direction at Queen's Park.

"The Ontario government is making it clear that it is not interested in taking climate action, and is effectively withdrawing from Canada's national climate change plan," said a statement from the office of Environment Minister Catherine McKenna.

"Canadians expect us to protect the environment and grow our economy, and we are taking action."

If Ottawa does put in a federal carbon tax, Ford has vowed to challenge it in court — a threat that aligns him with Saskatchewan's government.

Environmental group warns of cost

In Ontario, Ford's decision is drawing criticism from the opposition and environmental groups.

"The cancellation of cap-and-trade is a bad idea for many reasons," said Environmental Defence's Keith Brooks in a statement.

Brooks said cap-and-trade not only funds emissions-cutting programs — from social housing retrofits to cycling infrastructure — but is a system businesses have already invested in.

"The Ontario government will need to find billions of dollars to buy back those permits, or risk being sued."

Ford's statement does not address those concerns.

Ford was sworn-in as Ontario's 26th premier last Friday. Currently, the government's website does not list contact information for the newly appointed minister of the environment or any other cabinet members.

With files from The Canadian Press