Ontario announces cap-and-trade plan to help battle climate change
TORONTO — Premier Kathleen Wynne says Ontario will take "an enormous step'' to adopt a so-called cap-and-trade plan to curb greenhouse gas emissions and help battle climate change.
Wynne says right now companies are allowed to spew pollutants into the atmosphere for free, but everyone is paying the costs, and she dismisses claims cap-and-trade amounts to a tax grab.
The plan involves government-imposed limits on emissions from companies, and those that want to burn more fossil fuels can buy carbon credits from those that burn less than they are allowed.
Wynne says climate change is already imposing costs on society, damaging crops and increasing insurance claims, and warns the costs of not taking action will only get higher.
And she says cap-and-trade is a market solution, not a regulatory one, and will provide certainty for industry.
Toronto corporate/commercial and regulatory compliance lawyer Graham Erion tells AdvocateDaily.com this announcement is a big step forward for Ontario, and he expects it "to spur a lot of clean tech and energy efficient investment in our province as well as more liquidity in North American carbon markets."
He explains that the cap-and-trade system is currently in place in Europe and, to a more limited extent, globally (through the United Nation’s Clean Development Mechanism) and in some regions, including the Western Climate Initiative in California and Quebec, which Ontario is poised to join.
“Cap-and-trade favours the most energy efficient companies and those best able to take advantage of market opportunities for purchasing pollution credits or offsets. Legal counsel can assist in finding and executing on these transactions,” says Erion, a senior associate with Davis LLP.
Andrew Lord, partner with Davis LLP, tells AdvocateDaily.com the reinvestment of proceeds from the carbon market back into projects that help reduce emissions could "create a welcome source of capital for emerging clean tech companies in Ontario.
“While potentially more complex than a carbon tax, a well-implemented cap-and-trade system can offer the benefits of the emissions reduction certainty that comes with a cap and of the economic efficiency that comes with the ability to trade credits and offsets,” Lord says.
Erion says to the extent they haven’t done so already, large consumers of energy in Ontario should begin to measure their carbon emissions and assess their cost liabilities to carbon pricing at various price scenarios.
Environment Minister Glen Murray says the government will consult the public as it develops the details for the cap-and-trade scheme by October.
Wynne heads to Quebec City later today to sign a cap-and-trade deal with Premier Philippe Couillard, and they will be joined Tuesday by other premiers and territorial leaders for a climate change summit.
© 2015 The Canadian Press
— with files from AdvocateDaily.com