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TORONTO, 18 May - The Ontario government’s vote today to establish the province’s cap-and-trade system marked a major victory in the fight against climate change. By harnessing the power of the marketplace, the legislation will prompt a new wave of environmental investment and technology deployment while keeping costs in check for consumers. When it links with California and Québec’s existing carbon market, Ontario will gain the benefits of a broader partnership and increase the momentum for carbon pricing across North America.
Today’s vote in Ontario’s legislature sets the legislative foundation for a provincial carbon market to help cut greenhouse gas emissions to 15% below 1990 levels by 2020, 37% by 2030, and 80% by 2050.
In addition to setting near and long-term targets, Ontario’s new Climate Change Mitigation and Low-Carbon Economy Act ensures that all cap-and-trade auction proceeds are channelled into a Greenhouse Gas Reduction Account. The Act also strengthens the transparency and reporting of Ontario’s forthcoming Climate Action Plan and future investments from auction proceeds.
The province will post final cap-and-trade regulations following royal assent of the Act. The province has confirmed that the first Ontario-only auction will be held in March 2017, with the intention of linking to Québec and California’s joint market in late 2017 or 2018.
“Ontario’s decision marks the one of the first concrete actions on carbon markets since the historic Paris Agreement was agreed in December,” says Dirk Forrister, IETA’s CEO and President. “Given the size and scope of the legislation, it offers an important example for other governments across North America to examine.”
“The establishment of a market in Ontario next year will see four of the five-largest emitting provinces in Canada putting a price on carbon,” says Katie Sullivan, IETA’s Director of The Americas. “We look forward to working with Ontario as it launches its market program and works towards a link to its Québec and California partners.”
Ontario’s program is expected to eventually link to North America’s largest carbon market, jointly operated by California and Quebec through the Western Climate Initiative (WCI). Today, WCI held its seventh joint allowance auction.
“The addition of a third trading partner to the California and Québec is a major development,” says Sullivan. “The move will drive down compliance costs and allow business and investors to embrace efficiencies across a cross-border program with common rules, tools and infrastructure – all while ensuring environmental integrity.”She adds: “Linked carbon markets make good business sense – for Ontario’s decision to take this path shows that policymakers are starting to see the economic, trade and environmental benefits of emissions trading over other policy tools.”