Ontario prepares to join the Carbon Market

QUÉBEC CITY, Feb. 25, 2016 – The Government of Ontario has tabled a draft bill on establishing a cap-and-trade system for greenhouse gas emission allowances in the Legislative Assembly of Ontario The adoption of this law is a step towards Ontario joining the Québec-California carbon market.

Today Ontario is taking an important step towards setting up its own cap-and-trade system and joining the carbon market. Just like Québec, Ontario is taking a leadership position in the fight against climate change and in positioning itself for the 21st century economy that will be based on innovation and decarbonisation. This is the right way to ensure the welfare of our citizens and a prosperous future for our children,” stated Minister Heurtel.

The draft bill, entitled the Climate Change Mitigation and Low Carbon Economy Act, will make the following possible:

  • Provide a legal basis for Ontario’s greenhouse gas emission targets by entrenching them in law
  • Empower the Government of Ontario to define the operational rules of its cap-and-trade system by regulation
  • Set governance rules for the use of cap-and-trade income that will enable the Minister of the Environment to ensure that all projects funded from this income are examined and assessed
  • Prepare a climate change action plan and compel the government to review it at least every five years
  • Establish a set of provisions on information disclosure and transparency related to the abovementioned purposes.

Québec linked its cap-and-trade system to California’s on January 1, 2014, creating at one stroke the biggest carbon market in North America and the first to have been designed and operated by sub-national governments in different countries.

In April 2015, Ontario announced its intention to join the linked market. More than 20 million Canadians live in the provinces of Québec and Ontario, which together account for more than 50% of the country’s economy.

At the Paris Climate Conference, Manitoba also announced its intention to join the carbon market and cover its main industrial emitters through this mechanism. All three provinces subsequently signed a new Memorandum of Agreement aimed at linking their respective cap-and-trade systems by a date to be determined and conducting other joint initiatives.

The carbon market set up by Québec has the wind in its sails and is considered to be one of the most efficient in the world. At the recent launch of work published by the Carbon Pricing Leadership Coalition, the Secretary-General of the Organisation for Economic Co-operation and Development (OECD), Angel Gurría, observed that the Québec-California carbon market was a model for other jurisdictions.

The results of the sixth carbon market auction held jointly with California are now public.

As of today, Québec’s income from such sales is nearly 1.2 billion dollars. By 2020, it is estimated that the government will have collected in excess of 3.3 billion dollars to support its citizens, companies and municipalities in their transition to a low carbon world.

In Québec, all income from carbon market auction sales is paid to the Green Fund to finance the measures set out in the 2013-2020 Climate Change action Plan.

These measures address issues such as energy efficiency, renewable energy, clean technology, the electrification of transportation, mass transit and adaptation to the consequences of climate change.

“This announcement again confirms the proven leadership of Canadian provinces and territories in the fight against climate change. We need concerted action to preserve our planet and ensure that our children have a good quality of life. The environmental and economic legacy we will leave to future generations depends on the efforts we make today. Together, let’s do it for them!” concluded David Heurte, Quebec’s Minister of Sustainable Development, Environment and the Fight against Climate Change,


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