On 31 October 2018, Ontario’s legislature passed the Cap-and-Trade Cancellation Act of 2018 (Bill 4) with 74 votes in favor, to 42 against.
The Act was first introduced this summer and revokes the Climate Change Mitigation and Low-Carbon Economy Act of 2016 – the legislation that provided the legal basis for Ontario’s cap-and-trade regulation, province-wide emission targets, as well as green spending programs.
Prior to its adoption, the bill was amended to enlarge the scope for compensation for entities that held allowances when the cap-and-trade regulation was revoked (and the program effectively terminated) in July of this year.
In the prior version of the bill, only entities that could prove they had acquired allowances beyond the direct cost of complying with the cap-and-trade regulation (but not for post-2020 compliance) would have received compensation for that excess of allowances. Together with other conditions, this would have constrained eligible entities to a narrow set. In the Act, compensation will be determined based on the number of allowances held by the regulated entity compared to their emissions, even where these allowances were allocated freely.
Ontario will be subject to the Canadian federal carbon pricing backstop measure as outlined in the Pan-Canadian Framework on Clean Growth and Climate Change. Ontario is also currently holding public consultations until 16 November for a “Made in Ontario” climate change plan due to be finalized later this year.