On Monday, the Ontario MOECC posted the Cap and Trade Program Design Options to the
Environmental Registry. The province is seeking public comment on
the options under consideration for Ontario's GHG cap and trade
program, including on the timing, scope of the program, setting the
caps on GHG emissions, allowance distribution, price stability
mechanisms, market design features, compliance requirements,
flexibility mechanisms and enforcement. Feedback from the
public and stakeholder consultations will inform the
development of the final program.
The proposal covers a broad range of sectors, including:
Electricity generation in Ontario and imported for consumption
Industrial and large commercial operators in manufacturing,
base metal processing, steel, pulp and paper and food
Transportation fuel, including propane and fuel oil; and
Distribution of natural gas (e.g. heating fuel).
The proposal provides that the entities would be responsible for
their emissions as of January 1, 2017. The first auction of
emission allowances would be held in March 2017.
Ontario's program would be linked with existing cap and
trade programs in Quebec and California.
Ontario has set a goal to reduce GHG pollution by 15% below 1990
levels by 2020. Earlier this year, the government announced a target for 2030
– reduction of GHG to 80% below 1990 levels. A 2017
start date means that the cap will need to decline by approximately
3.7% per year to achieve the 2020 targets.
In an effort to balance the goal of reducing GHG emissions with
fostering growth and maintaining a level playing field with
existing facilities, new industrial and institutional facilities
that begin operation on January 1, 2016 or later and have annual
emissions equal to or greater than 25,000 tonnes would have their
compliance obligations start in their third year of operations.
The province has identified certain sectors as emissions
intensive and trade exposed. These sectors may experience
"carbon leakage" impacts. Carbon leakage describes
the shift of production to a jurisdiction with a less stringent
carbon pricing policy. The proposal contemplates distributing
a portion of the emissions allowances free of charge to large
emitters involved in the production of trade goods which are
vulnerable to carbon leakage. Emissions attributable to
electricity generation would not be eligible for the free
allowances. The remainder of the emission allowances would be
sold at auction.
The proposal outlines enforcement mechanisms and penalties.
For example, where an entity's emissions exceed their
allowances and/or offset credits, that entity would be subject to a
three-to-one compliance penalty. The entity would be required
to provide three additional allowances for each allowance short,
plus the allowance originally required. The province states
that it intends to develop rules around administrative monetary
penalties that would apply under both the cap and trade regulation,
as well as the emissions reporting regulation.
The MOECC is accepting public comments via the Environmental
Registry until December 16, 2015.
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.
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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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