Ontario to detail cap-and-trade system for carbon emissions in coming days
Wynne government hopes to cut greenhouse gases, but industry worries about cost increases
Whether you're putting fuel in your car, heating your home or manufacturing a product in Ontario, you'll soon know more about the price the province wants you to pay for the carbon you pump into the atmosphere.
Premier Kathleen Wynne's government is expected to unveil more of its plans for a cap-and-trade system on greenhouse gas emissions, which environmental groups predict will generate $2 billion annually for the province.
What's being brought forward is going to be a big deal.Peter Tabuns , NDP environment critic
There are many unanswered questions about the cap-and-trade plan: exactly how much it will cost, who will bear the biggest burden, what the government will do with the money and how far it will bring down Ontario's carbon emissions.
Some answers should come soon. Wynne's government is poised to reveal its new "climate change strategy" sometime in the coming weeks. The government says it also plans to release draft cap-and-trade rules in the new year for public input.
Wynne will travel to Paris for the UN conference on climate change in early December, along with other premiers and Prime Minister Justin Trudeau.
"What's being brought forward is going to be a big deal," NDP environment critic Peter Tabuns said.
"Cap-and-trade can work really well, but the details matter," said Keith Brooks, head of the clean economy program for Environmental Defence. "So we're going to be paying close attention to the details, really want to make sure that Ontario gets this right."
Ontario's Liberal government indicated back in April that it will join the cap-and-trade system under the Western Climate Initiative, a program already in place in Quebec and California. But that announcement included no specifics.
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A cap-and-trade system works like this: The government imposes caps on carbon emissions, and gradually lowers the caps over time. Big businesses must obtain permits to emit greenhouse gases; those that become more efficient and use less than their quota, can sell the rest of the permits — that's the trade part of cap-and-trade.
The idea is the system will help Ontario meet its target of reducing greenhouse-gas emissions by 15 per cent by 2020.
"We really want to work with the government to help them hit all the targets, help them meet all of the expectations of the public, but do it in the way that's the least costly," said Adam White, president of the Association of Major Power Consumers in Ontario.
"We want to see some certainty with respect to how quickly those emissions are going to come down," Brooks said. "Cap-and-trade can't do it all, but the monies raised from cap and trade can be put back into reducing emissions so we're going to be looking for that as well."
Wynne is refusing to say how much the government expects to generate. The group Clean Energy Canada predicts the amount will be in the hundreds of millions of dollars in the initial stages. Environmental Defence puts the figure at $2 billion by 2020.
The government is promising to reinvest the money "back into projects that reduce greenhouse gas pollution and help businesses remain competitive."
'Increased costs for energy'
Naturally, environmental groups and business have different views on how the government should spend the revenue from cap-and-trade
"We want to see it invested wisely in initiatives that are going to reduce emissions," said Brooks. "Those could be energy efficiency initiatives, more renewable energy initiatives, they could be things around electrification of transportation, something to retrofit your home, that kind of thing would go a long way."
White questions the impact that such projects would actually have on reducing greenhouse gases. He urges the government to spend the money in ways that achieve the greatest carbon reduction per dollar. "We'd like to see those proceeds committed to assistance of industries in transition," White said.
White's group represents the largest energy-using industries, such as steel mills, mining, pulp and paper, and the auto sector. "They're going to be looking at paying increased costs for energy across the board."
It's possible Ontario will give some free carbon emission allowances to certain industries. Quebec, for instance, has given blanket exemptions to its manufacturing sector until 2020.
Who pays more: industry or consumers?
"Industry should be taking the bulk of the burden," said Tabuns. "If it puts undue burden on people trying to heat their homes in winter, this is going to be politically very problematic."
Tabuns wants public hearings into whatever the government proposes on cap-and-trade. The government has already been consulting for months, it says. "The feedback we are receiving will influence elements of the program," said David Mullock, press secretary to Environment and Climate Change Minister Glen Murray.
"We will continue to work with environmental groups, industry and the public as we prepare a draft regulation for further consultation."
Editor's note: This story has been amended to reflect an updated timeline from the province about when details for the cap-and-trade plan will be unveiled.