Duncan Rotherham of ICF International delivered
a presentation at the Ontario Energy Association (OEA) breakfast on
February 18, 2016. He made a number of predictions about the
ability of Ontario's pending Cap and Trade regime to achieve
the 2020 and 2030 carbon reduction targets. He also provided cost
estimates to typical homes and small businesses which can be
expected over the next 15 years. A copy of Mr. Rotherham's
presentation is available through the OEA website.
The presentation noted that Ontario's electricity sector is
not a significant contributor to carbon emissions with the closure
of its coal-fired generating stations. While natural gas generation
accounts for about 15 percent of the province's electrical
supply, it is the use of natural gas for other purposes (heating
and commercial and industrial use) and transportation fuels which
are the largest contributors.
Mr. Rotherham noted that Ontario's nuclear fleet will see
units retired or undergo lengthy refurbishments. This will increase
reliance on natural gas generation. Given this, even with currently
planned emissions reduction initiatives in key sectors, a sizeable
gap of between 8 and 10 Mt CO2e and 25-30 Mt
CO2e will exist in 2020 and 2030, respectively, relative
to the province's targets. Mr. Rotherham noted that we are
unlikely to see a significant increase in the price of carbon until
the allowance surpluses which exist in California turn into a
deficit position around 2025/2026. His view is that with Ontario
participating, it will only accelerate the pending deficit by about
one year. It is estimated that by 2030, the price per tonne
CO2e may be approximately $95 versus a forecast of $18
in 2017/2018. The near-term rates would add incremental costs to
heat the typical residential home of $85 per year and another $80
per year to operate a motor vehicle. Those costs are similar to the
estimate provided by Premier Wynne on February
24, 2016. These costs rise to $450 and $405 per year, respectively,
in 2030. For small manufacturers, the costs are estimated at
$170,000 in 2017/2018, and $900,000 per year in 2030, assuming no
free allocation to small manufacturers.
From the perspective of the gas utilities, given the customer
base of each, it is to be expected that revenues will reach into
the hundreds of millions per year, even at the $18 per tonne rate.
One view expressed is that these revenues will need to be used to
support the new infrastructure that will be required to meet the
GHG targets. That appears to be what the Government of Ontario is
seeking to accomplish through the "Green Investment
Fund," which we described in a previous
post, and the Greenhouse Gas Reduction Account which is
included as part of the newly tabled "Climate Change Mitigation and Low-carbon Economy
Act, 2016." According to Mr. Rotherham, simply requiring
consumers to pay the price of CO2 will not be sufficient
to cause the structural and behavioural changes required.
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).