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Cap and trade details released in 2016 budget

For all of the Ontarians that were muddled by the lack of information in the cap and trade proposal, many of those questions have been resolved in the 2016 Ontario budget.

The Ontario Liberal government has released specific details about the cap and trade program, which is set to begin in January 2017 under the new Climate Change Mitigation and Low Carbon Economy Act. The cap and trade program will enforce a “cap” on the amount of greenhouse gases that each company can produce. Companies will be able to then “trade” unused carbon credits by selling them to companies that exceed their “cap”.

This enables companies that use clean energy to create financial gains and penalizes companies that have high levels of carbon emissions. The cap and trade program is expected to raise $428 million in 2016-2017 and is then projected to raise up to $1.8 to $1.9 billion in 2017-2018.  Cap and trade is one of the many initiatives the provincial government has enacted to reduce greenhouse gas emissions by 80 per cent below 1990 emissions by 2050.

All of the proceeds from the cap and trade program will go to projects and funds in the Greenhouse Gas Reduction Account, which will then support other green projects. The Ontario government has promised the money raised will be transparent, with results of the funds available for the public. Possible green projects include public transit, electric vehicle incentives, social housing retrofits including geothermal infrastructure, and clean-technology incentives for industries.

Ontario’s cap and trade program is mandatory for industries and institutions that emit 25,000 tonnes or more of greenhouse gases annually. It also includes suppliers and distributors of fuel that distribute 200 litres of fuel or more per annum. Companies that import electricity and fuels into Ontario would also be included in the cap and trade. The businesses mandatorily included within the program are representative of 83 per cent of the total greenhouse gas emissions produced in the province.

Initially, Ontario will give free permits to industries that are especially vulnerable to the cap and trade program, including steel or cement manufacturing, to avoid “carbon leakage”, the feared result of companies leaving Ontario to go to other jurisdictions where the carbon cap wouldn’t apply.

Companies and organizations that produce over 25,000 tones of greenhouse gases due to it’s size — like university campuses, hospitals, and electricity generators — will have to purchase carbon permits, which is how the government will make substantial profit in the coming years. If these industries apply clean technologies, they will be able to then “trade” their extra credits and make money from carbon-emitting industries.

Free credits will also be provided on a one-time basis to industries that have voluntarily lowered emissions targets earlier then the January 2017 deadline. Companies with between 10,000 and 25,000 tonnes of greenhouse gases will also have the choice to participate in the cap and trade program, but won’t be forced to.

The “cap” is also set to decline annually to meet 2020 carbon emissions targets and will decrease at a rate of 4.17 per cent per year. A slow decrease in rates allows companies to invest in clean industries slowly and adjust to the new cap and trade program.

Many Ontarians are concerned about rising prices from the cap and trade program. Gas prices are set to increase 4.3 per cent per litre and natural gas costs for home heating will rise $5 per month. Though these increasing prices will put more financial pressures on the consumer, energy programs are being introduced to help mitigate the costs.

Recently, the government introduced an incentive of up to $14,000 to purchase an electric vehicle. Enbridge Gas Distrubtion and Union Gas are also offering programs to help homeowners reduce their electricity costs. An incentive ranging between $1000 and $2,500 is offered if a consumer replaces their furnace and water heating system to a more energy reductive alternative. Enbridge also offers a $75 incentive for an adaptive thermostat, which helps save on heating costs as well.

What is cap and trade?

Climate change is on everybody’s mind. The Ontario government has been slowly releasing a stream of green initiative announcements about green cars and environmentally sustainable housing retrofits, but one of the most important initiatives is still to come. Investing in a cap and trade program is one of the best options for the province, with the potential of making a vast impact on the amount of carbon Ontario produces.

Cap and trade agreements place limits on the amount of carbon companies can produce without being financially penalized for it. The “cap” puts a limit on the specific amount of emissions that can be produced annually. In Quebec and California, which currently have active cap and trade programs, the cap declines annually by three to four per cent to allow companies to slowly adjust to increasing carbon reduction targets.

The “trade” allows companies to participate in a market where companies can buy or sell carbon credits. The carbon credits are linked to every tonne of greenhouse gas that is emitted. The “trade” portion of the incentive creates an opportunity for companies make financial gains through the use of environmentally sustainable initiatives — if a company lessens their rate of emissions, they can sell their unused carbon credits to other companies.

The cap and trade program simultaneously rewards companies that have lowered emissions, while penalizing companies that use high levels of greenhouse gases. The incentive also pushes companies to invest in green technologies.
When the cap and trade programs were put in place in Quebec and California, free permits were accessible initially to companies that were particularly vulnerable to the cap and trade program, and Ontario is due to follow suit. Companies that are emissions intensive and trade exposed (EITE) will receive free permits until they can gradually meet targets and reduce greenhouse gases.

Ontario’s cap and trade program will partner with the existing system in Quebec and California. The partnership will allow access to a bigger pool of low-cost emission reductions, a larger market for trade, and help to set a common price for carbon across several jurisdictions.

It is expected that the cap and trade program will make $1.4 billion for the Ontario government annually through penalties, permits, and the auctioning off of carbon credits. Ontario has promised this profit will be invested back into environmental initiatives. “The proceeds generated through cap and trade in Ontario will be reinvested in a transparent way. They will be used for initiatives that further reduce greenhouse gas pollution, support innovation and help households and businesses reduce fuel needs,” said the Cap and Trade Program Design Options report, released by the Ontario government.

Cap and trade essentially holds high carbon-emitting companies accountable and allows environmental sustainable companies the opportunity to make financial gains while supporting the green energy industry and boosting government dollars. More importantly though, it makes strides towards a world where human beings co-exist with the planet rather than continue to destroy it— that is, as long as the government doesn’t auction off too many credits, allowing emission-intensive companies to continue producing greenhouse gasses by simply paying for it.

The Ontario Premier, Kathleen Wynne, is positive that this new cap and trade program will make a substantial difference in the province’s emission levels.

“To fight climate change — one of the greatest challenges mankind has faced — Ontario is putting a limit on the main sources of greenhouse gas pollution through a cap and trade system to protect the air we breathe, the water we drink and the health of our children and grandchildren,” she said in a statement back in April.

The Ontario government will be revisiting the cap and trade program in Thursday’s budget meeting, in preparation for its estimated launch in January 2017.

Women of the week: Heather Kleb

What do you think of when you think of nuclear energy?

Interim president and CEO of the Canadian Nuclear Association (CNA), Heather is striving to create a more positive environment for nuclear energy, educating the masses on the many positives of the power source while helping to advance the industry.

“I’m a big believer in nuclear energy, because it’s good for the environment and it’s good for the economy. We supply much needed power while minimizing the release of greenhouse gases. And our industry provides thousands of highly skilled, well paying and rewarding jobs while doing it.  Basically, it’s good for Canadians,” Heather says.

With a background in environmental science, Heather has a great deal of experience working in what she calls “responsible resource development.” After several years of working in the mining and logging industries, Heather was offered the role of environmental scientist with Atomic Energy of Canada Limited and found her niche. Ten years later, she is serving as the interim president and CEO.

A female CEO in a scientific association might seem like an oddity to an outside spectator, but Heather sees it as an example of the way things are moving in this field.

“I think that the fact that our Board of Directors asked me to assume the interim president and CEO role speaks volumes about our industry.  There is definitely a growing number of women in senior roles throughout our industry,” she says.

A firm believer in the nuclear industry, Heather would like to see the number grow and encourages other women to consider the field.

“It currently provides over 30,000 interesting, challenging and rewarding jobs for Canadians.”

As part of her job, Heather works to combat the negative images of nuclear energy and has participated in a number of regulatory hearings.  When asked, however, about what stands out as memorable about these hearings, she chooses not to dwell on “the antics of the very passionate non-governmental organizations,” who tend to have a very vocal presence. Instead, she highlights the actions of Port Hope Mayor Linda Thompson.

“Mayor Thompson spoke thoughtfully to the benefits the nuclear industry would bring to her community and the families that live there,” Heather says.

This resolve, to highlight the positive elements of her field while refusing to get bogged down by the negative characters who seek to destroy nuclear power, stands out in Heather’s character. She believes in her industry and wants to raise awareness about the many ways nuclear energy can improve people’s lives.

“The nuclear industry generates more than just power,” she says. “We produce isotopes that aid in the diagnosis and treatment of many forms of Cancer. In fact, Canada provides between 20-30% of the world’s supply of isotopes.”

This alternate purpose of nuclear technology is important to note, given the rising rates of cancer. As a testament to this link, the CNA is partnering with the Canadian Cancer Society and raising funds for research. Watch for the Relay for Life in Ottawa on June 7, hosted by the CNA.