TORONTO—Ontario has passed legislation creating a cap-and-trade system to fight climate change, which the government predicts will add $5 a month to home heating bills and 4.3 cents to the price of a litre of gasoline, or $8 a month on average.
“The costs, according to our economists, are $13 a month, and that’s before we consider any of the investments,” said Environment Minister Glen Murray.
“So if you’re buying an electric vehicle or home heating and cooling system or new energy systems that we’ll be helping subsidize, that will lower those costs.”
Under cap and trade, industries are given specific pollution limits, but can sell their emission allowances to other companies if they come in below their annual limit, or buy credits if they exceed it.
The province plans to hold its first auction of pollution credits in early 2017, and expects to raise $1.9 billion a year from the plan, promising to use the money to help people and companies transition to a low carbon economy.
The Chamber of Commerce urged the Liberals to delay implementation of cap and trade for one year.
“We need to think about striking a balance between leading, driving and shaping, and not getting so far ahead of our competitors that we just get too far ahead,” Chamber president Allan O’Dette said in an interview Wednesday. “If we get so far out and we lose our competitive advantage, we need to be mindful of that.”
The Progressive Conservatives support the idea of putting a price on carbon to reduce greenhouse gas emissions, but say it should be revenue neutral, and claim the Liberals will use the money generated to balance the books.
PC Leader Patrick Brown, who skipped Wednesday’s vote on the cap-and-trade bill, issued a release condemning the Liberals for adding to the cost of living.
Murray said economists determined that Brown’s idea of a revenue neutral carbon tax would eliminate the money the government plans to use to help people offset the costs of converting to a low-carbon economy.
“The team recommended that would jump the cost per month to about $107 per household, about eight or nine times more,” he said.
“That confirmed the original numbers we saw when we choose cap-and-trade over a revenue neutral carbon tax system.”
Ontario will join existing cap-and-trade markets in Quebec and California starting next January. Manitoba has also signed on to join in the cap-and-trade plan with Ontario and Quebec, but will limit it to 20 large polluters in the province.
Emission allowances will be capped at roughly 142 metric tonnes per year in 2017, which is expected to decline 4.17 per cent each year to 2020, when the Liberals hope to have achieved a 15-per-cent reduction in greenhouse gas emissions over 1990 levels.
But some major Ontario industries will be given a four-year exemption from cap-and-trade, which the government says is necessary to protect Ontario jobs in sectors that compete with jurisdictions without a carbon pricing system.
The carbon pricing scheme is a key part of the Liberal’s climate strategy, but their climate change action plan won’t be officially released for a couple of weeks.
The Liberals denied 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.
“There is no natural gas police, and natural gas will continue to be a part of home heating and cooling,” insisted Murray.
—With files from Allison Jones