Will Ontario’s Cap and Trade system for greenhouse gases impact industry? Yes. How will it impact industry? We don’t know yet.
Ontario’s GHG Cap and Trade Program
By now you know that Ontario has joined Quebec, California, and others in the Western Climate Initiative by establishing a cap and trade system for Greenhouse Gases (GHG) (Ontario actually joined the Western Climate Initiative in 2008). With the mandatory cap and trade system in place, it will build on the previous requirements O. Reg. 452/09: Greenhouse Gas Emissions Reporting. Under O.Reg 452/09, certain industries that emitted 25,000 tonnes of GHGs have been reporting their emission every year on June 1st.
Greenhouse gases can be emitted from a variety of sources, including combustion of fossil fuels, landfills, agriculture, fertilizers, refrigeration, fermentation, and more. You can read more about sources of the six greenhouse gases at the International Carbon Bank Exchange.
Under the recently adopted cap and trade system in Ontario, there will be limits on the amount of carbon dioxide that companies can discharge. Companies will be allowed to trade any “unused” emission on an open market. Similarly, if you need to purchase emission credits, you will also be able to purchase them on the open market. The most recent auction price for CO2 that I ran across was approximately $12/tonne.
Who is Affected by the GHG Cap and Trade?
So, how many companies will this new program impact? Again, it’s not known at this time, but looking at Quebec’s cap and trade program for CO2 emissions, “The program’s enforceable compliance obligation began on
1 January 2013. It covers about 85% of Québec’s emissions” (see Canada – Québec Cap-and-Trade System). So it’s likely that many, if not most, of Ontario’s manufacturing companies will be eventually impacted by this program.
Further, it is not known what the actual financial impact will be on industry or consumers. However, the direct, financial impact to consumers has been speculated to be an increase of 2 to 10 cents/litre of gasoline.
Premier, Kathleen Wynne, said, “It would be irresponsible of us to speculate on exactly what the costs are going to be when we haven’t worked to design the mechanism yet.” This “mechanism” is expected to be in place sometime within the next six months.
As a point of reference, the website statista reports that Canada is responsible for 1.57% of the world’s energy-related carbon dioxide emissions (as of 2014).
GHG Emission Inventory
What does all of this mean to you? Again, we don’t know at this point, but, if you have not already done so, you might want to consider an inventory of your greenhouse gas emissions. Knowing this may help you as you plan for the roll out of the cap and trade program later this year. As we learn more about the “nuts and bolts” of this cap and trade program, we’ll do our best to convey this information to you.
If you need assistance in conducting a greenhouse gases inventory, my colleague, Andrew Tymec, P. Eng. (atymec@dragun.com) can assist you. You can reach Andrew at 519-979-7300, ext 118.