The Ontario Government introduced greenhouse gas (GHG) cap and trade enabling legislation into the Ontario Legislature yesterday. The Environmental Protection Amendment Act (Greenhouse Gas Trading), 2009 is meant to clarify the Ontario Government's authority to establish a GHG cap and trade system and allow for related auctions of compliance instruments. The importance of this move is that it places Ontario ahead of the curve on cap and trade legislation in the country, and is likely a move designed to create leverage for the province when the federal government - and its U.S. counterpart - finalize their carbon trading plans.

The creation of a cap-and-trade system for industry will help the province meet its climate change commitments to reduce GHG emissions by 6 per cent below 1990 levels by 2014 and 15 per cent by 2020.

Ontario has had months of discussions with nine industrial sectors likely to be involved in cap and trade. These sectors are base metal, cement, chemical, electricity, lime, natural gas, petroleum, pulp and paper, and steel. Environmental groups were also consulted. These sectors represent about 40 per cent of Ontario's total emissions in 2007. Electricity alone accounts for 16 per cent, according to Statistics Canada.

Ontario and Quebec formed a working alliance on this issue in June 2008. Together they represent close to 60 per cent of Canada's economy.

The bill includes a definition of greenhouse gases as carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, or sulphur hexafluoride.

It also allows the government to link its cap-and-trade system to those of other jurisdictions - an important consideration, as Ontario is part of the Western Climate Initiative. 
 
The Bill is accompanied by a Discussion Paper and both will be subject to a 60 day consultation period. To read the Act, click here. For related information, click here.

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