Posts Tagged ‘cap-and-trade’
On December 3rd, Ontario passed Bill 185, amending the Environmental Protection Act to provide a framework for a cap-and-trade system for greenhouse gas (GHG) emissions in the province. The amended act now allows Ontario to join other cap-and-trade systems systems in North America and abroad.
It authorizes the Environment Minister to regulate emissions trading and other economic and financial instruments and market-based approaches. This will allow for the distribution of economic financial instruments relating to GHG emissions through sale, auction and by other means.
The amended act also requires proceeds from the sale or distribution of such instruments to be deposited in a separate account to used toward supporting and administering GHG reduction initiatives.
Martin Wolf of the Financial Times offers three criteria for post-Copenhagen climate change policies to be truly effective.
First, we need prices for carbon that apply over relevant planning horizons. That price cannot be fixed forever, but must change with events. But it needs to be far more stable than in the European Union’s market for permits (see chart). A tax seems more attractive to me than “cap and trade”, for this reason.
Second, where the abatement occurs must be separated from who pays for it. Abatement needs to happen where it is most efficient. That is why emissions of developing countries must be included. But the cost should fall on the wealthy. This is as much because they can afford it as because they produced the bulk of past emissions.
Finally, we need to develop and apply innovations in all relevant technologies. A paper from the Bruegel think-tank argues, persuasively, that merely raising prices on carbon emissions would reinforce the position of established technologies. We need large-scale subsidies for innovation as well.
The Ontario government is seeking comments on a draft Greenhouse Gas (GHG) Emissions Reporting regulation that would phase in requirements and support the implementation of a cap and trade program that can link to other GHG systems. This proposal has been posted for a 30 day public review and comment period starting October 07, 2009 until November 06, 2009.
The regulation proposes the following requirements:
Also, the regulation includes the following:
Smaller emitters: Facilities emitting between 10,000 and 25,000 tonnes are not required to report under the current proposed regulation, but the MOE will develop an outreach program to encourage voluntary reporting.
Fuel suppliers: Ontario’s proposed regulation and guideline does not cover fuel suppliers. However, Ontario will consider their incorporation into the regulation, taking into account a review of the Western Climate Initiative methods (when finalized) and the U.S. Environmental Protection Agency (EPA) future requirements.
Harmonization of requirements: Ontario might harmonize its requirements with those of the federal government, the other provinces and the U.S. EPA, if possible.
For more details, click here.
In my latest article for National magazine, I assess some of the challenges facing lawyers and businesses in addressing the growing patchwork of climate change legislation.
Dianne Saxe discusses the options available to Ottawa and the provincial governments when it comes to climate change legislation. Here’s what she has to say about Ontario’s current situation:
“Comments on Ontario’s cap and trade plan are due in three weeks, on July 24. However, the policy context has changed dramatically since Ontario’s discussion paper was drafted, and is continuing to mutate quickly. Canada has done so little for so long that our climate policy has laid us wide open to the serious protectionist provisions in the 1500 page US House of Representatives Bill HR 2454, the American Clean Energy Security Act. That likely means that Canadian rules must match American ones.”
As we’ve already discussed here, the U.S. bill calls for reducing our Southern neighbour’s greenhouse gas emissions by 80 per cent by 2050. It also includes a cap and trade system, and a requirement that utilities get at least 15 per cent of their electricity from renewable fuels.
More worrying for Canadian companies, the bill targets a range of sectors from the cement industry to steel producers and could end up giving the U.S. government the power to block the entry of energy intensive imports from countries that do not meet U.S. standards. With these proposed border adjustments and the prospect of other countries imposing carbon tariffs, Canadian exporters will have no choice but to come up with effective carbon reduction strategies to stay competitive in their industry.
First and foremost though, Canada will have to ensure that its targets, enforcement mechanisms and its reporting rules are consistent American ones.
The interplay between climate change and trade issues promises to be a hot topic in the years ahead.
