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.


Kaeleigh Phillips is Women's Post sustainability coordinator. She specializes in writing about issues relating to the environment, including renewable energy, cycling, and vegan recipes!

Write A Comment