To help mitigate climate change – one of the most urgent issues of our time – Ontario is proposing to implement a greenhouse gas cap and trade program. A cap and trade program effectively reduces the amount of greenhouse gas pollution going into our atmosphere by setting a limit on emissions, rewarding innovative companies, providing certainty for industries, and creating more opportunities for investment.
On November 16, 2015 the Ministry of the Environment and Climate Change posted a policy paper to the Environmental Registry (012-5666) for 30 days to gather comments on the design options under consideration for Ontario’s greenhouse gas cap and trade program. In addition, since May 2015, Ontario has met with more than 700 stakeholders on cap and trade, including industries, associations, environmental organizations, and labour groups. The Government will continue to involve and engage individuals, businesses, communities, municipalities, non-governmental organizations and First Nation and Métis communities in the ultimate goal of fostering a high-productivity low-carbon economy and society in Ontario.
The ministry is now posting:
- A regulatory proposal for a cap and trade regulation, which includes an appendix presenting detailed technical information for the distribution of allowances to eligible capped emitters for the first compliance period, details related to early reduction credits, and an overview of complementary amendments for the reporting regulation and incorporated guideline to support implementation of the cap and trade program. Following the 45 day consultation period, comments received will be considered and the content of this document, including the grey shaded boxes in the draft regulation, will be revised accordingly and integrated into the final cap and trade regulation.
- A revised Guideline for Greenhouse Gas Emissions Reporting.
Cap and Trade Regulatory Proposal
The cap and trade regulatory proposal outlines the policy for a number of program elements, including:
- Proposed caps
- Capped and uncapped (market) participants
- Compliance periods
- Registration rules
- Auction and sale rules
- Strategic reserve of allowances
- Market rules such as holding limits and purchase limits
- Compliance requirements
- Credit for early action
Proposed Complementary Amendments to the Greenhouse Gas Emissions Reporting Regulation:
To support the proposed cap and trade program, the Ministry is now proposing to revoke the Greenhouse Gas Emissions Reporting Regulation (O.Reg. 452/09) and replace it with a new greenhouse gas reporting regulation and incorporated Guideline under the Climate Change Mitigation and Low-carbon Economy Act, if passed. Proposed changes will include:
- Requirements to report production and other process related information;
- Provisions to allow facilities with emissions between 10,000 and 25,000 tonne to opt-in;
- Clarifications on measurement requirements and reporting of biomass types; and
- Refinements to the Regulation and Guideline to facilitate implementation of the Cap and Trade Regulation.
The cap and trade program is a key initiative for the government to fight climate change by reducing greenhouse gases. The program would reduce the amount of greenhouse gas pollution going into the atmosphere by setting a limit (i.e., cap) on emissions from capped participants. Over time, the cap is lowered, reducing greenhouse gas pollution.
Ontario will propose any necessary amendments to the regulation to facilitate linking of the Ontario program with the programs of Quebec and California once linking agreements are in place. These amendments would include:
- the recognition of allowances and credits from California and Quebec
- adjustment of the holding limits and purchase limits to account for the size of the linked markets
- currency adjustments related to the auction
Climate Change Mitigation and Low-carbon Economy Act:
Climate change represents one of the most urgent issues of our time. To help mitigate climate change, Ontario is proposing to implement the Climate Change Mitigation and Low-carbon Economy Act, 2016 (the Bill). The Bill intends to establish a long-term framework for climate action. It would enshrine Ontario’s cap and trade program in law, and require regular action plans detailing how targets will be achieved.
Ontario has met with more than 700 stakeholders on cap and trade, including industries, associations, environmental organizations, and labour groups. With this bill, Ontario will reduce its reduce greenhouse gas pollution and reinvest proceeds from cap and trade to benefit Ontario’s families and businesses, through activities such as energy retrofits to help households and businesses use less fuel and electricity.
The proposed Act builds on Ontario’s leadership and ensures a platform for effective long-term action by:
- Establishing targets and requiring an Action Plan detailing how the targets will be achieved;
- Establishing a strong foundation for the cap and trade program;
- Dedicating all cap and trade proceeds to a new Greenhouse Gas Reduction Account, where they may be used to support emission reductions and program delivery – helping achieve Ontario’s goals and ensuring a close link to the purpose of the program is maintained; and
- Ensuring transparent and accountable action with regular reports and reviews of progress and use of proceeds.
On February 24, 2016 the Ministry of the Environment and Climate Change posted the Climate Change Mitigation and Low-carbon Economy Act to the Environmental Registry (012-6844).
Additional Regulations Planned Under the Climate Change Mitigation and Low-carbon Economy Act
To create a robust offset credit program in Ontario, a separate offsets regulation will be drafted under the climate change legislation later in 2016. The offsets regulation will describe the requirements proponents must meet to be able to create, verify and register offset credits for use in Ontario’s greenhouse gas cap and trade program.
This proposal was posted for a 47 day public review and comment period starting February 25, 2016. Comments were to be received by April 12, 2016.
All comments received during the comment period are being considered as part of the decision-making process by the Ministry.
Please Note: All comments and submissions received have become part of the public record.
The cap and trade program is a key initiative for the government to tackle climate change by reducing greenhouse gases. The program would reduce the amount of greenhouse gas pollution going into the atmosphere by setting a limit (i.e., cap) on emissions from covered facilities. Covered facilities will be required to participate in the cap and trade program, either reducing their greenhouse gas emissions or meeting their compliance obligation through use of other tools, according to their regulatory requirements.