Ontario has finalized their cap and trade plan, which will place a carbon tax on high-polluting industries that are contributing to climate change. The climate change legislation was passed on Wednesday and emphasizes the importance of accountability and transparency when investing proceeds for the cap and trade into green businesses through the Greenhouse Reduction Account.
The cap and trade program is a part of the bigger Climate Change Action Plan to reduce greenhouse gas emissions 15 per cent below 1990 levels by 2020. By placing a “cap” on carbon emissions and allowing companies to sell off or “trade” unused credits for a profit, it will help limit and lower emissions in the province. Ontario joins Quebec and California, which have cap and trade programs in place already.
Ontario is expected to generate $1.8 to $1.9 billion per year to invest in environmental initiatives in the province through emission auctions. The cap and trade program is scheduled to take effect on July 1 2016. Regulations were determined on Wednesday, including greenhouse gas emission caps, compliance regulations, auction and sale of allowances and distribution of allowances.
The Chamber of Commerce urged Premier Kathleen Wynne to delay the cap and trade program for one year. Criticisms result from a lack of transparency as to where the proceeds of the cap and trade program are going. Many industry leaders that will be affected by cap and trade are reportedly confused about the regulations that will be put in place, though it appears they are more concerned about how they will be affected financially. The program is set to continue despite these trepidations.
On a positive note, Manitoba has joined the cap and trade plan with Ontario and Quebec, but will limit their program to the 20 largest polluters in the province. This will help balance industry competition and outsourcing to neighbouring provinces that aren’t forced to participate in cap and trade, which has become a relevant concern of the program.
Ontario will give a four-year exemption to industries that are especially vulnerable to cap and trade, including steel or cement manufacturing. Emission targets were also released in the report, indicating the exact allowances that will decrease annually to allow existing companies to adjust to the new program. In 2017, emission allowances are 142, 332,000 tonnes, which will decrease over four years to 124, 668,000 in 2020.
Though the cap and trade program will be a difficult adjustment initially for companies, it will soon become an integral part of doing business while taking the environment into consideration. This is an opportunity for green businesses to take the lead and for Ontario to set an example for the remaining provinces that cap and trade is the only way to make climate change protocol the foremost item on the agenda.