On August 31, 2016, Ontario signed a Joint Declaration with Mexico and Quebec,
pledging to work together "in the fight against climate
change." More specifically, the parties agreed to conduct
cooperation activities on carbon markets and jointly promote the
expansion of carbon market instruments for greenhouse gas emissions
reduction in North America. According to the press release from the Government of Ontario,
this agreement will "drive progress on the common commitment
to pricing carbon." As noted in a recent news article, Mexico also has a similar
agreement with California.
Ontario is launching its cap and trade program in January 2017.
One year later, Ontario will link its emissions credits to the
Quebec and California joint auction under the Western Climate
Initiative. The Joint Declaration with Mexico appears to open
the possibility of another participant in this joint market in the
future. This underlines the interesting question about what will
happen with the future pricing and revenues from carbon emissions
credits. To the extent that the joint market expands, Ontario
emitters may have more opportunities to acquire credits from out of
the jurisdiction. That is an important issue in Ontario, where
government revenues from the sale of credits (forecast at around
$1.8 billion per year) are earmarked to fund the Climate Change Action Plan. Where Ontario's
cap and trade revenues are lower than forecast (perhaps because the
price is lower than expected, or because credits are purchased from
other jurisdictions), the scope of the programs under the Climate Change Action Plan will have to be
revisited and reduced.
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Ontario's Ministry of the Environment and Climate Change continues to roll out its Climate Change Action Plan with its proposed GHG guide for projects that are subject to the province's Environmental Assessment Act.
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