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Water Today Title December 9, 2018

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Update 2018/7/19
Renewable energy


MAKING SENSE OF THE END OF CAP AND TRADE IN ONTARIO



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by Cori Marshall

On July 3, new Ontario Premier, Doug Ford, announced the end of Cap-and-Trade in the province. The Premier said that money spent from the fund "is money taken out of the pockets of Ontario families and businesses." Cap-and-Trade was also equated with punishing "Ontario residents at the gas pump."

According to the Environmental Defense Fund (EDF) qualified Cap-and-Trade as "our best shot, environmentally and economically, for curbing emissions that drive global warming." The cap is a scientifically based limit, companies exceeding these limits will face fines that become increasingly stricter. The carbon market, or trade aspect, allows companies to buy and sell the emission allowances which are unused.

Ontario's Cap-and-Trade Carbon Tax funds a wide range of programs, the Ford government has ensured "an orderly wind-down of [these] programs," and will "honour any arrangements where contracts have been signed, and orders have already been made." This affects energy efficient insulation and window retrofits.

In the days following the announcement, we communicated with Gary Wheeler, Media Contact for the Ministry of the Environment Conservation and Parks. Wheeler said that the announcement prohibits "all trading of emission allowances." He confirmed that the end of Cap-and-Trade means "the immediate wind down of the Green Ontario Fund."

At the time of our communication Wheeler could not say what the wind down would look like other than "in the coming weeks, more details will be shared to support the orderly wind down."

What the end of Cap-and-Trade really meant was still unclear, for example how was the announcement received by the province's sustainable energy sector?

Leo Wasser, Chair, Policy and Advocacy for the Ontario Sustainable Energy Association (OSEA), explained in a statement to WaterToday "[the] program had been established under Ontario's Five Year Action Plan for Climate Change in response to the requirements of the Pan-Canadian Framework on Clean Growth and Climate Change."

"The most immediate and direct effect is the cancellation of 758 renewable energy contracts representing $790 million in planned investments in clean energy as well as the entire GeenON renewable energy and energy conservation program," Wasser said.

    "Most of the immediately cancelled projects were for municipalities, schools, farmers and Indigenous communities who wanted, and in many cases needed, a supply of clean, renewable power."
    Leo Wasser, Chair, Policy and Advocacy for the Ontario Sustainable Energy Association


Wasser said the government's decision "will hurt clean energy suppliers, engineers and all other professionals needed to create a clean energy project." He underlined "the impact of this on Main Street will be to depress the entire CleanTech sector, one of Ontario's fastest growing economic sectors in terms of jobs and income."

Wasser said the decision to cancel the program "has created uncertainty for all the stakeholders in the Cap-and-Trade system including large GHG emitters who depended on the system to facilitate their transition to cleaner processes."

Ontario entered into a cap and trade linking agreement in September 2017, with Qu├ębec and California. The deal came into effect on January 1, 2018 and allowed for joint auctions of emission allowances and credits issued by all three jurisdictions. Wasser said, "as soon as our program was cancelled, [...] our Cap-and-Trade system Carbon Credit trading partners, closed their markets to Ontario's existing credits."

    "The impact of this development on Bay Street will be to create uncertainty about the reliability and risk associated with this element of Ontario's financial and infrastructure development sectors which in turn can potentially lead to higher risk pricing."
    Leo Wasser, Chair, Policy and Advocacy for the Ontario Sustainable Energy Association



There are a lot of uncertainties surrounding the decision by the Ford government to scrap Cap-and-Trade. The full extent of the fallout will most likely not be known for some time.

Wasser summed it up quite succinctly the cancellation of projects "already underway will likely result in litigation, [...] the main beneficiary of this development will be the lawyers engaged to help figure out the consequent damages resulting from government policy decisions."

cori.m@watertoday.ca





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