The Ontario government has set out the cap on carbon emissions permitted over the next five years as it brings in legislation to combat climate change.
Buried in the fine print of the new legislation, released Thursday, Ontario has limited greenhouse gas emission allowances at 142.2 million metric tonnes in 2017, reducing it by 4.2 per cent each year until it hits 124.6 million metric tonnes by 2020.
The province is bringing in the cap-and-trade program on Jan. 1, 2017, which will create limited tradable allowances in the carbon market. The carbon price in Ontario would be roughly $18 a tonne, compared to $30 a tonne in British Columbia. Alberta has said it will bring a $20 a tonne carbon levy that will grow to $30 in 2018.
For consumers, the Ontario government says the cap-and-trade program will translate into about $5 a month in higher home heating costs, or 3.3 cents per cubic metre, and $8 a month in higher gasoline costs, or 4.3 cents a litre.
But Union Gas warns that the impact could be much more on natural gas consumers, noting the hikes will be compounded over time.
“I have some trouble the $5 figure with $18 a tonne cost,” said Matthew Gibson, director of government affairs for Union Gas, adding the figure is likely closer to $8 to $9 a month. “This number doesn’t go down. It’s cumulative.”
He noted that in other jurisdictions, there was a longer phase-in period.
“You ask your friends and family was cap-and-trade means. They think the smokestack, or the industrial players,” Gibson said, but bigger emitters are getting exemptions. “They got a free allowance.”
Under Ontario’s plan, the larger organizations will receive exemptions over the first four years — which the government dubs “transitional assistance,” in sectors such as cement, petrochemicals, steel and mining.
Companies include Petro-Canada Lubricants in Mississauga, Imperial Oil in Sarnia, Vale Canada’s nickel refinery in Sudbury, and Brampton Brick in Brampton and Hanson Brick in Burlington.
Non-profit organizations including the University of Toronto and York University and some hospitals, which generate their own power, will always receive free allowances, though if they lower emissions then they can sell unneeded allowances.
Ian Howcroft, Ontario vice-president of the Canadian Manufacturers & Exporters, emphasized that the policies must make both economic and environmental sense.
His group is working on a $25 million partnership with the province to help companies reduce greenhouse gas emissions.
According to the most recent data, in 2013, Ontario emitted an estimated 171 million metric tonnes — but that was before the province closed the last coal-fired generating power plant in 2014.
The Liberals say putting a price on carbon will bring in $600 million more than originally anticipated — as much as $1.9 billion in 2017, with $478 million occurring in 2016-17. The funds will be earmarked to efforts to fight climate change.
Opposition leaders Andrea Horwath and Patrick Brown expressed concern about how the money will be spent – whether it might just go toward balancing the books.
Keith Brooks of Environmental Defence said all the proceeds from the auction of permits will go to a greenhouse gas emissions funds.
“Those are on things that will have an impact on reducing emissions and will report on it annually,” Brooks said, adding the Liberals appreciate transparency and accountability is critical for public support.
Ontario Federation of Labour president Chris Buckley called the cap-and-trade program a step in the right direction.
“It’s a step in the right direction,” said Buckley. “There is no doubt that large companies and employers that don’t pay enough tax in this province, are going to find fault if it costs them a little extra.
“If they are truly concerned about our climate and future generations, they should not have a problem with taking part,” he added.