Ontario’s New Climate Change Legislation centres on Cap and Trade and Green Investment

Bill 172, Climate Change Mitigation and Low-carbon Economy Act, 2016 passed 3rd reading in  the Ontario Legislature on May 18th and will become law upon Royal Assent.   The law sets GHG emission reduction targets of of 15 per cent by the end of 2020;  37 per cent by the end of 2030; and 80 per cent by the end of 2050. The bill also sets out the framework for the Cap and Trade program: the official Ontario Regulation 144/16 (May 19)   is here  ; the government summary is here  ; a summary by the National Observer is here .   The first year of the program, 2017, sets  an economy-wide cap of 142 megatonnes per year , declining to 125 megatonnes per year by 2020. All proceeds from the cap and trade program will be deposited into a new Greenhouse Gas Reduction Account,  which will “ be invested in a transparent way back into green projects that reduce greenhouse gas pollution and help homeowners and businesses save energy such as public transit, clean-tech innovation for industry, electric vehicle incentives, social housing retrofits.”   The details of implementation will come in June when the government releases the first of the Climate Action Plans required under the legislation.

Key to the Government’s public relations battle is a report by EnviroEconomics, Navius Research and Dillon Construction: Impact Modelling and Analysis of Ontario Cap and Trade Program , which analyses four alternate program structures and concludes that the proposed program will be least costly  to households and have the lowest impact on provincial GDP ( the proposed plan resulting in the equivalent to a drop in growth of 0.03% in 2020). The Clean Economy Alliance , a multi-sector coalition of 90 green organizations, had called for explicit Just Transition language for workers in the legislation, according to a Unifor press release , but the only “transition” changes in t he final text of the legislation appear in section 2.1, regarding households:  “The action plan must consider the impact of the regulatory scheme on low-income households and must include actions to assist those households with Ontario’s transition to a low-carbon economy.”

Nevertheless, reaction by environmental groups has been enthusiastic: the Clean Economy Alliance press release welcomes the legislation, and Keith Brooks, Director of Clean Economy, calls the legislation “a big deal”, “a huge step forward, and one worthy of celebration” in his blog; the Pembina Institute says  “ it is laying the foundation for solid success”.  In the mainstream media, pushback started with a story in the Globe and Mail on April 27, “New Ontario agency will be given sweeping mandate to overhaul energy use”  – which summarized details of a leaked, preliminary draft of the the Climate Change Action Plan (still under discussion in Cabinet).  More leaked details were revealed in “Ontario to spend 7 Billion in sweeping climate change Plan”    (May 16) , which states that the province will set lower carbon fuel standards for gas and diesel, change building codes to require all new homes by 2030 to be heated with electricity or geothermal systems (currently 76% of homes are heated with natural gas), and set a target for 12 per cent of all new vehicle sales to be electric by 2025.  In “Ontario passes bill to create cap and trade system”  on May 19, the Globe tempers the storm their reporting has created with: “The Liberals deny a published report claiming their climate change plan would include phasing out the use of natural gas for home heating, and point out they are expanding the gas grid to more rural areas of the province.”  On May 20, Nic Rivers, Canada Research Chair in Climate and Energy Policy at the University of Ottawa, weighs in with “The Ontario climate plan: Should provinces follow or flee?”  .

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