In our latest blog piece covering Ontario's
planned adoption of a cap-and-trade system that will be linked with
the existing systems in Quebec and California, we described some of
the major recent developments in Ontario and the United States to
help put the province's cap-and-trade efforts in context. These
developments include: the successful implementation of legislation
and market mechanisms to curb sulfur dioxide and nitrogen oxide
emissions in the 1990s and early 2000s, the development of the
Western Climate Initiative, the signing of a Memorandum of
Understanding with respect to a provincial and territorial
cap-and-trade initiative between Ontario and Quebec, and the
introduction of enabling cap-and-trade legislation in Ontario. In
this piece, we illustrate the key elements of Quebec and
California's linked cap-and-trade regime with a view towards
anticipating how Ontario may choose to design its system over the
While the content, scope and design of Ontario's
cap-and-trade system has yet to be determined, there is already a
significant congruence between the California and Quebec regimes.
For example, both systems cover the same greenhouse gases and
sectors, set the same emissions thresholds and have virtually
identical allocation methods. Several other similarities are also
evident when comparing Quebec's relative population size and
gross regional product to those of California (21% and 16%,
respectively). For example, Quebec's Allowance Budget, Maximum
Emissions Covered, Emissions Target and Offset Use Limit (as
illustrated in the table below) are all between 15% and 16% of
California's, closely mirroring their differences in population
size and economic activity. On this basis, with a population of
13.6 million (35% of California) and a gross regional product of US
$570 billion (30% of California), Ontario's cap-and-trade
system may well yield similar relative results. Naturally, however,
other factors will come into play as Ontario implements
cap-and-trade, and we will follow these developments closely.
The significant parallels between Quebec and California's
cap-and-trade systems have enabled both markets to integrate
quickly and seamlessly. Despite only officially linking carbon
markets in 2014, Quebec and California have already successfully
held two joint auctions of greenhouse gas allowances in December,
2014 and March, 2015, respectively. The third joint auction of
greenhouse gas allowances between the two jurisdictions was
recently held on May 21, 2015.
Given Ontario's desire to link with the cap-and-trade
markets in Quebec and California, their systems will likely play a
significant role in dictating the approach Ontario takes. Below is
a chart that summarizes the main features of California and
Quebec's cap-and-trade systems as it relates to several key
criteria the Ontario government will have to consider in the coming
To continue reading this article, please click
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
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...
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).