As January 1, 2017, the day which marks "ground zero"
for climate change reform in Ontario draws near, the provincial
government is scrambling to put into place a structure of reforms
and incentives that will support its sweeping climate change
promises. As you'll recall from our
previous posts, Ontario's goal is to have a live
cap-and-trade plan as of January 1st, and the Province
is expecting allowance auction revenues of upwards of $1.8 billion
per year. In an effort to inspire confidence and relieve industry
tension, the provincial cabinet leaked some details of their
"transformational" Climate Action Plan, which contains a
detailed strategy on how Ontario plans to achieve its future
climate change goals.
Requirements for all new homes to be heated without fossil
fuels in 2030 and this requirement will extend to all homes by
Introduction of mandatory energy audits for most homes sold in
$3.8 billion for new grants and subsidies to assist businesses
and consumers with their switch from natural gas and other fossil
fuels to electricity
Rebates of up to $14,000 for new electric vehicles with a goal
of electric vehicles making up 12% of all new vehicle sales by
The plan provides for incentives to fuel distributors to sell
fuel blends that may include up to 85% ethanol or other
Over $550 million dedicated to electrify the regional train
networks and to construct additional bike lanes and bike
You will recall from our
earlier posts that Ontario's emissions breakdown, as
illustrated in the chart below, suggests that any emissions
reduction must come from improvements in the building and
transportation sectors (and particularly the types of fuels
consumed by those sectors) and that such change will have a
significant impact on both businesses and consumers.
The leaked details can be summarized simply as "good-bye
fossil fuels, hello electricity" and aim to completely phase
out natural gas heating and leverage Ontario's clean
electricity grid for transportation. As always, the devil will be
in the details and it is appropriate to have a certain degree of
skepticism that the ambitious timeframe and sweeping changes will
be effected exactly as proposed.
The plan also includes a swath of other measures to encourage
clean industry and clean technology in an effort transform Ontario
into a low-carbon economy. The significance of these measures is
evident when we consider that natural gas accounts for nearly 76%
of all heating, and electric vehicles for less than 1% of all new
vehicle sales in Ontario.1
Desperate times call for desperate measures – we
anticipated that to meet the ambitious greenhouse gas reduction
plans of this government, significant changes would be required.
While the leaked details provide some clarity on how the provincial
government plans to spend the $1.8 billion generated by the
cap-and-trade plan, there are still many important pieces missing.
The proposals intend to alter the fundamental nature of the Ontario
economy and it remains to be seen whether a transformational change
can be implemented within such a short timeframe.
Ontario Emissions Breakdown
Source: National Inventory Report 2015 (2013 data),
Ontario's Long-Term Energy Plan and Greenhouse Gas Emission
1 Source: The Globe and Mail; Fleetcarma; Statistics
Canada: new motor vehicle sales, by province (monthly).
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