As recently reported to the Globe and
Mail newspaper by government sources, Ontario Premier Kathleen
Wynne is preparing to implement a cap-and-trade system for
greenhouse gas emissions as part of the Province's strategy to
combat climate change. The initiative would be tied to Quebec and
California's existing cap-and-trade system, which held its first joint auction of greenhouse gas
allowances in December, 2014, and its second in March, 2015. An
official announcement is expected by Ontario Environment Minister
Glen Murray in the near future, with further details to come later
this spring and summer.
Under a cap-and-trade system, Ontario would limit the amount of
carbon that can be emitted by certain businesses and raise money by
selling or auctioning emissions permits that represent the right to
emit a specific volume of carbon. Permits are then traded on
secondary markets. Companies that wish or need to emit more carbon
than the regulated cap or than the permits they then hold must
purchase permits from other companies that plan to emit less than
the limit. Proponents of a cap-and-trade system will note that
forward looking businesses can adopt cleaner or more efficient
energy uses and thus profit under a cap-and-trade system by holding
excess emissions permits that are available for sale. Under the
current joint Quebec-California program, companies are able to
trade carbon allowances across jurisdictions to comply with local
greenhouse gas emission limits. A Quebec company, for example,
could purchase allowances from a certified greenhouse gas emissions
reduction project in California in order to comply with its own
Quebec provincial targets, and vice versa. Initial estimates
indicate that a cap-and-trade system in Ontario could raise between
$1 billion and $2 billion per year which would then likely be
invested in green programs.
Ontario's cap-and-trade system has been contemplated since
at least 2008, when the Province agreed to price carbon emissions
by signing the Western Climate Initiative with Quebec, British
Columbia and California. Despite passing enabling legislation for a
cap-and-trade system a year later, the Province never moved
forward. Premier Wynne may have the momentum and political
opportunity to implement cap-and-trade now.
As discussed here, Ontario recently initiated a 45-day
public review and comment period on climate change, following the
government's release of its climate change
discussion paper. The paper, which identifies the risks and
challenges associated with climate change in Ontario, and the
public comment period, was aimed at informing the government's
decision on its climate change strategy, as it questioned which
carbon pricing mechanism to adopt in the Province. Unlike Quebec,
for example, British Columbia utilizes a carbon tax that puts a
price on every tonne of carbon burned. It appears that Ontario will
proceed down a path similar to Quebec and employ cap-and-trade (at
least in part) to address climate change policy.
We will be sure to update this blog with any new developments.
In future blog posts, we will explain in greater detail the
mechanics underlying the current California and Quebec systems and
will provide commentary on the details of the Ontario cap-and-trade
regime as they unfold. As in any program aimed at achieving policy
aims through capital markets and commercial means, the devil will
be in the details. We will examine these details in future blog
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In Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363, the Alberta Court of Queen's Bench enforced the "immediate replacement" provision in the Canadian Association of Petroleum Landmen 2007 Operating Procedure...
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