Today the Government of Ontario released a consultation document that outlines the options it is considering to deliver on its commitment to address climate change and reduce carbon emissions in the province.

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The Government is Set to Put a Price on Carbon

We do not yet know the specifics of how the government will proceed on carbon pricing, but the consultation document confirms that the Ministry of the Environment and Climate Change is weighing several options for market mechanisms that would be used to price carbon in Ontario. They are:

• A cap and trade system that places a limit on total emissions, with the price being determined in the market. Quebec adopted this measure in 2013, and currently applies it to large electricity generators and industrial facilities, and transportation and heating fuels.
• A baseline and credit system that aims to reduce the intensity of greenhouse gas emissions without limiting the total amount of greenhouse gas emissions. A baseline is set for each carbon emitting business or organization, who are then required to improve their efficiency by a set amount. Businesses and organizations who overachieve receive credits, and those who do not meet their targets can buy credits. Alberta established this system in 2007, and requires businesses and organizations who do not meet their targets to pay $15 per tonne of excess emissions.
• A carbon tax that sets a price for carbon emissions that businesses, organizations, and individuals are required to pay. This approach was adopted by British Columbia in 2008, where the current price of carbon is $30 per tonne of carbon dioxide.
• Regulations and performance standards that would require businesses to meet standards or specific targets or to use specific technology.
  

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  What’s Next?

  The Government of Ontario is now undertaking a 45 day consultation process to elicit feedback on its consultation paper. The Ministry of the Environment and Climate Change will hold meetings in a number of Ontario cities. For a complete list of consultation times and locations, click here.

  After the consultation period, the government will make a decision on which mechanisms or approaches to adopt.

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  The Ontario Chamber of Commerce’s Position

  While the OCC supports efforts to lower greenhouse gas emissions, we are wary of any policy or regulatory change that would impose undue costs on Ontario businesses or hurt job creation, especially when the cost of business in the province is slated to rise as a result of the Ontario Retirement Pension Plan and soaring electricity rates.

  Government must not lose sight of the impact that new policy and regulatory changes could have on Ontario’s economy. Over the coming weeks, the OCC will work closely with its members to more clearly develop a response to the proposals outlined in the government’s consultation paper.

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  Questions or comments? Contact Alexandra Schwenger, Policy Analyst at the Ontario Chamber of Commerce or Huzaifa Saeed, Policy & Research Analyst at the Hamilton Chamber of Commerce.

 

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