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Ontario announces cap-and-trade program

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On 13 April, Premier Kathleen Wynne announced a cap-and-trade program for the Canadian province of Ontario, which it intends to link to the joint system of California and Québec. Given Ontario is one of Canada’s major economic and manufacturing centers, more than 80% of Canada’s national emissions will soon be covered by carbon pricing instruments. Alongside Ontario’s decision to phase-out coal from its energy supply mix, the cap-and trade program should also play an important role in achieving the province’s 2020 target of reducing emissions 15% below 1990 levels. Revenue raised by the program will be reinvested into additional emissions reduction projects and to ensure businesses remain competitive.

At the Québec Summit on Climate Change held the following day, Canadian provincial leaders reaffirmed their commitment to combating climate change. Additionally, Wynne and Québec Premier Philippe Couillard signed a letter of intent to work toward linking their cap-and-trade systems. Ontario will now embark on a six-month consultation phase as to how it will design a cap-and-trade program that can also be linked up to the joint system in California and Québec. Ontario further announced a mid-term target of cutting emissions by 37% below 1990 levels by 2030 in May, aligning itself with the recently published goal of California of 40% emission reductions below 1990 by the end of the next decade.

Ontario first committed itself to carbon pricing when it became a member of the Western Climate Initiative (WCI) in 2008. The WCI is an initiative of several American states and Canadian provinces that aims to develop a joint strategy to reduce greenhouse gas emissions through a regional cap-and-trade program. Ontario has also been a member of the International Carbon Action Partnership since 2009.

In February 2015, the Ontario government had released a Climate Change Discussion Paper for public comment. The paper outlined Ontario’s vision for climate change leadership and transitioning towards a low-carbon economy. Additionally, it also discussed short-term ‘critical’ climate policies, including a price on carbon; although the choice of instrument was left open until Wynne's announcement. 

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