Ontario’s Cap & Trade on GHG emissions
Ever since Premier Kathleen Wynne announced that Ontario has signed a letter of intent with Quebec to adopt a cap and trade system that sets limits the greenhouse gas emissions, industry has been set a buzz with trying to understand the implications.
But what are the implications? And what will Ontario’s cap and trade system look like? Right now, the MOE, industrial stakeholders, and consultants are still trying to establish exactly that. Given that policies will been to be established, regulations enacted and amended, it’s not likely that we will see anything formalized until sometime in 2016, perhaps even later.
In 2009, the Ministry of Environment (MOE) published “Moving Forward: A Greenhouse Gas Cap-and-Trade System for Ontario” which provides background on the framework that the MOE is considering in adopting its system.
Also in 2009, Ontario took its first step in setting up the cap and trade system when it passed O. Reg 452/09: Greenhouse Gas Emissions Reporting. This regulation requires facilities with stationary fuel combustion equipment, and specific industrial processing that emit CO2, to report to the MOE if their total emissions of GHGs exceed 25,000 tonnes of CO2e (carbon dioxide equivalent). This regulation has two components, first the reporting of the emissions, and then a third party validation of the emission estimates. The third party verification must be done by a firm that has been accredited under ISO 14064, and that can confirm that the report meets the international standards of ISO 14064-3. For a GHG report to be verified, the verifier must conclude that the GHG calculations are accurate within +/- 5%.
These verified GHG reports will serve as the basis for establishing where companies fall within the cap & trade system. To discussions are still open, and some major considerations are:
- What year to use as baseline? (potential negative impacts if baseline year was a year with production cut-backs, i.e. average from 2003-2007)
- Phase-In – will everyone be brought in at once, or will it be staggered based on sector?
- Allowance/Allocation – how will the allowance of GHG emissions be determined? How an
- Offset Credits – how will they work? Pricing structure (open market, floor/ceiling pricing, etc)
There is still a lot left to figure out, and multiple rounds of stakeholder meetings still to be had. But the biggest question still on everyone’s mind is how much will all this cost?
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