Last month, the province of Ontario passed revolutionary climate change legislation that lays the groundwork for them to join the largest carbon market in North America, linking them with the Quebec and California market already in place.
This measure guarantees that the province will responsibly invest the proceeds from the cap-and-trade program into actions that will reduce greenhouse gas pollution, generate jobs, and assist both people and businesses make the change to a low-carbon based economy.
Under the Climate Change Mitigation and Low-Carbon Economy Act, the funds that are produced from the cap-and-trade program will be deposited into the province’s “Greenhouse Gas Reduction Account.” Every Canadian dollar that is raised will be invested in initiatives to reduce harmful GHG pollution and further the transition to a low-carbon economy.
Upon royal assent, the province is expected to officially launch the new cap-and-trade system January 1, 2017. While it is still in development, the current plan is the result of a combined effort between the provincial government and the local business community, various environmental organizations, the public at large, and indigenous communities.
The Climate Change Mitigation and Low-Carbon Economy Act falls under the province’s Climate Change Action Plan, a radical plan with 80 different policies that encompasses nearly three dozen different “actions” that will be implemented beginning in 2017. The primary goal of this $7 billion plan is to reduce the current amount of greenhouse emissions Ontario releases each year. This will be done in stages, with the first goal of a 15 percent reduction from 1990 rates by 2020; 37 percent by 2030, and a massive 80 percent by the year 2050.
To achieve these goals, substantial expenditures will be made in several key areas. Here are some of the highlights of how the $7 billion will be spent:
Almost $4 billion will be used to retrofit existing structures, enabling them to be heated from solar, electric, or geothermal sources while keeping energy rates low. An energy audit will be required before one is able to sell their home. New building codes in 2030 will require new construction homes and most buildings to be built without natural gas or other fossil fuels as their heating source. All new construction will have this requirement by 2050. $175 million is allotted to bring government buildings up to code.
Changes to the transportation industry will also require a major outlay. Almost $300 million will be used for electric car initiatives, with the government providing a rebate of up to $14,000 for each electric car purchased. Installing a home charging station will net a $1,000 rebate. Lower income residents may qualify for an additional subsidy to remove older vehicles from circulation.
Money will also be earmarked for building charging stations, and new construction will be required to include charging ports. School districts and the trucking industry will also receive almost $300 million for electric buses and lower carbon trucks. The GO Regional Rail Network will receive $300 million for upgrades to its infrastructure, and an additional $200 million will be used to make roadways safer for bicycles.
As continuing green research is of the utmost importance, $375 million in funding will go towards R&D, including the building of a Global Centre for Low-Carbon Mobility that will further research green transportation technology. The manufacturing industry will receive 1.2 billion for new equipment and machinery to assist with their compliance.
The majority of the funding to implement these programs will come from the cap and trade program. “Cap” refers to the limits that will be set on emissions. The limit will be gradually lowered each year so the goals for 2020, 2030, and 2050 are met.
The “trade” refers to the carbon allowance market that will assist businesses with meeting or coming in under these limits. The less they emit, the more money they save. The cap will set the limit they can emit, and if they exceed the limit, they will be fined. The cap limits will apply to all major industries, including the energy sector, both electric and natural gas producers, the transportation industry, and major manufacturers. Emitters will be allotted so many credits or allowances. One ton of carbon dioxide will be the equivalent of one allowance, and the total amount of allowances will be equal to the total cap. Business will be aware of the diminishing yearly caps and their allotted allowance, which will enable them to plan ahead.
Depending on the industry, some companies will naturally find it easier to comply than other industries. Many won’t end up using all of their allowances, while others will struggle with their given allotment. This is where the trade comes in. It will allow companies to buy and sell their allowances with one another. The reason this will work is because carbon dioxide is unique in that it is a global pollutant; whether it is released in Toronto or Chicago or Beijing, it all goes into the air, affecting the entire globe, not just the local air quality.
A company that is able to effectively cut their pollution will end up with leftover credits. They can then sell these to other companies who require more credits yet while they work to change their current operations. This will provide an economic benefit to the company that uses less, translating into a profit in their pocket for reducing their emissions output and reducing pollution. The pollution caps are still in place and met each year with this market system.
The natural gas industry will also be using renewable natural gas (RNG) content to help them meet their goals. RNG is a renewable natural gas that is created from the organic waste created from landfills and wastewater treatment plants. Their industry goal is to use five percent RNG by 2025 and 10 percent by 2030. It is blended with natural gas and requires no changes to home heating and cooking equipment to use. The use of RNG-blended natural gas in these amounts will be the equivalent of removing approximately three million vehicles from circulation.
The Chamber of Commerce has urged the Liberals to delay the cap and trade system for another year, saying too many questions remain unanswered, while the Progressive Conservatives support the reduction of emissions, but believe it should be a neutral tax rather than a market, fearing the Liberals will use the money to balance the books.