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Ontario Cap and Trade Program

Published on
August 22, 2016

Last week, the Ontario Ministry of Environment and Climate Change (MOECC)  shared this presentation with stakeholders by webinar, regarding the next steps for Ontario’s cap and trade program.

By way of background, under the Climate Change Mitigation and Low-Carbon Economy Act there are two key pieces of regulation pertaining the province’s cap and trade program – the Cap and Trade Program Regulation (O.Reg 144/16) and the Quantification, Reporting and Verification of Greenhouse Gas Emissions Regulation (O.Reg 143/16). The former came into the effect on July 1, 2016 while the latter will come into effect January 1, 2017. 

The presentation outlines key upcoming work in the short/medium/long term:

-          Regulatory amendments in fall 2016

  • Offsets
  • ‍Early Reduction Credits
  • Administrative Penalties
  • Treatment of Indirect Steam Emissions
  • ‍Other Administrative Changes

-          Amendments to facilitate linking with Quebec and California (2017)

  • Ontario intending to link in 2018

-          Post-2020 program design

  • Number of potential areas for consideration, including 2021-2030 caps, review of point of regulation, approach to free allocations, expanded economic analysis out to 2030

-          Federal/Provincial/Territorial collaboration on carbon pricing

  • The Pan-Canadian Framework working group on Clean Growth and Climate Change will submit its report to ministerial tables by September 2016; this will include recommendations regarding carbon pricing
  • ‍Ontario indicates it is moving forward with its cap and trade program

-          Emissions leakage analysis

  • Jurisdictional review and assessment of approaches elsewhere
  • Working with Ministry of Economic Development and Growth and other ministries to ensure Ontario’s economy is reflected in the leakage assessment
  • ‍Stakeholder discussions on post-2020
  • Finalize post-2020 leakage risk assessment for Ontario and approach to allocating free allowances.

No firm dates for these initiatives were provided but it is anticipated that MOECC will initiate discussions regarding the fall regulatory amendments in the coming weeks.

Concurrent to this, MOECC is working with mandatory /voluntary/market participants under the cap and trade program to prepare for its implementation (e.g. registration into CITSS, allowance application process, etc).

In terms of next steps for the Ontario Climate Change Action Plan (CCAP), we anticipate that consultations regarding the development of the Green Bank will begin early in the fall.

Please contact our team if you have any questions. 

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