Ontario Cap and Trade Generates $1.3B/Year for Climate Action
Ontario’s new carbon cap and trade system will increase gasoline costs by about 4.3¢ per litre and raise home natural gas bills by about $5 per month, while generating $1.3 billion in its first year of operation, Premier Kathleen Wynne announced earlier this week.
“The cost of doing nothing is much, much higher than the cost of going forward and reducing greenhouse gas emissions,” she said.
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Program revenue, based on a minimum price of $17 per tonne of carbon dioxide, will be devoted to carbon reduction initiatives across the province.
“The fund will have an explicit list of the type of investments that can be made and will issue an annual report,” the Globe and Mail reported, citing a government source. “All spending is meant to be in addition to what is already being allocated for transit and other environmental programs.”
Ontario announced last year that it would join Quebec and California in a carbon cap and trade system that will cover more than 60% of Canada’s population and create a market of more than 61 million people.
The Globe and Mail says the program will include a “free allowance” to give the province’s most polluting industries time to prepare for the new rules. “Under the cap-and-trade plan, 102 large industrial emitters will get free permits to produce GHGs at roughly current levels in 2017, but they will have to reduce them each year to 2020,” the paper notes.
The Pembina Institute endorsed Ontario’s plan, including its decision to reinvest its cap and trade revenue in carbon reduction initiatives, including public transit infrastructure.
“Pricing carbon is crucial to reduce emissions and address climate change. But it’s only one part of the solution,” said Ontario Director Cherise Burda. “The transportation sector is Ontario’s largest and fastest-growing source of carbon pollution. Providing stable and dedicated funding for transit infrastructure—which also reduces traffic congestion —is therefore a critical step forward.”