Canada: Climate Change Mitigation And Low Carbon Economy Act Is Passed

As we reported in an earlier blog post, the government introduced the Climate Change Mitigation and Low Carbon Economy Act (the Act) on February 29, 2016. The Ontario Government has now passed this legislation.

The final Act is similar in substance to the draft we described in our earlier post. A few changes have been made and they include:

  • The Minister of the Environment is required to publish a Climate Change Action Plan by January 1, 2017;
  • The Act includes new measures for transparency related to the distribution of free allowances, including requirements that information be made available to the public regarding the amount of free allowances distributed and to whom (in some cases, aggregated information may be provided);
  • By January 1, 2021, the Minister must publish an outline of a plan that describes how the distribution of free allowances will be phased out; and
  • The Minister must make information about the initiatives that are being funded from the Greenhouse Gas Reduction Account available to the public annually.

The final cap and trade regulation, the draft of which is detailed in our earlier blog, should be released in the near future. Stay tuned.

Ontario's draft Climate Change Action Plan now under review

In related climate change news, Ontario's draft Climate Change Action Plan (CCAP) is now under review by Premier Kathleen Wynne's cabinet and is expected to be released to the public in June 2016. It has been reported that under the proposed CCAP, the province will spend $7 billion from 2017 to 2021 on a series of climate change initiatives ranging from building retrofits, to the implementation of lower-carbon fuel standards and rebates for electric vehicle purchases. The draft CCAP, which is part of Ontario's broader Climate Change Strategy, contains approximately 80 different policies that are grouped into 32 different actions; each action comes with its own price tag and an estimate of associated emission reductions by 2020. A breakdown of the spending is available here. It is anticipated that the majority of programs will be funded by revenue from the cap-and-trade system.

As reported, highlights of CCAP are as follows:

  • $3.8 billion will be allocated to new grants, rebates and other subsidies for the purposes of retrofitting buildings and shifting them from natural gas to geothermal, solar or other forms of electric heat. Many of these programs will be administered by a new Green Bank, which will provide financing for geothermal and solar projects.
  • New building code rules will require all homes and small buildings built in 2030 or later to be heated without using fossil fuels; this requirement will be expanded to all buildings before 2050. Under new building code changes, energy efficiency measures will be required for major renovations and all homes will also have to undergo an energy efficiency audit before they are sold.
  • $285 million will be provided for electric vehicle incentives, including (i) a rebate of up to $14,000 for every electric vehicle purchased; (ii) a rebate of up to $1,000 to install home charging; (iii) removal of the provincial portion of the HST on electric vehicle sales; (iv) an extra subsidy program for low- and moderate-income households to replace older cars with electric vehicles; and (v) free overnight electricity for charging electric vehicles. CCAP sets a target of expanding electric vehicle sales to 5% of all vehicles sold by 2020, which will increase to 12% by 2025 (representing approximately 80,000 electric vehicles annually). The goal is to have an electric or hybrid vehicle in every multivehicle driveway by 2024 (representing a total of approximately 1.7 million cars).
  • New lower-carbon fuel standards would require all liquid transportation fuels (including gasoline and diesel), to cut life-cycle carbon emissions by 5% by 2020. The plan will also provide $176 million in incentives to support the sale of more biodiesel and 85% ethanol blend.

In addition, CCAP allocates additional funding for public transportation, the creation of more cycling infrastructure, research and development into new clean technologies, and investments to make government carbon neutral.

With an emphasis on climate change initiatives that will rely on Ontario's electricity grid for emission reductions, a more detailed assessment will be needed as to how these initiatives will fit within the province's existing and planned electricity distribution, transmission and generation system.

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