Long-Term Climate Change Strategy

On November 24, 2015, the Ontario government released its long-term Climate Change Strategy (CCS) as part of the province's expanding climate change policy development process.

Ontario has previously set the following greenhouse gas (GHG) emissions reduction targets:

  • 15 percent below 1990 levels by 2020
  • 37 percent below 1990 levels by 2030
  • 80 percent below 1990 levels by 2050

The CCS sets out, in broad strokes, how Ontario intends to achieve these targets. Five crucial areas are identified for transformative change over the next decades:

  1. Develop a Prosperous Low-Carbon Economy with World-Leading Innovation, Science & Technology
  2. Engage in Government GHG Policy/Bridge-Building both Domestically and Internationally
  3. Increase Resource Efficiency of Energy, Water and Land
  4. Reduce GHG Emissions Across Key Sectors
  5. Adapt to a Changing Climate

The CCS is intended to be supported by a series of five-year detailed action plans, the first of which will be released in 2016.

Cap and Trade Program Design Options

The Ontario government has recently advanced 4) Reduce GHG Emission Across Key Sectors by releasing design options for a cap and trade program. Ontario intends to link its cap and trade program with Quebec and California and possibly other jurisdictions. The Ontario government is seeking feedback which will be compiled and presented to various stakeholders in early 2016, following which the government will release a draft set of regulations for the cap and trade program. The topics are:

  1. Linking with Quebec and California
  2. Timing
  3. Program Scope: Sector Coverage, Point of Regulation; Emissions Coverage; New and Expanding facilities; Opting-in
  4. Setting the Cap
  5. Market Design Features: Registration Requirements; Trading Rules; Market Rules; Auction; Reserve Sale Rules
  6. Price Stability Mechanisms: Auction Reserve Price; Strategic Reserve
  7. Distributing Allowances
  8. Flexibility Mechanisms
  9. Use of Offset Credits
  10. Border Carbon Adjustments
  11. Recognizing Early Reductions
  12. Compliance Requirements: True-up; Acceptable Compliance Units; Offset Usage Limit; Retirement; Voluntary Retirement
  13. Enforcement and Penalties: 3-to-1 Rule; Account Restrictions; Administrative Monetary Penalties

Ontario's recent climate change policy development mirrors recent activity in other Canadian jurisdictions, most notably Alberta's Climate Leadership Plan. The United Nations Framework Convention on Climate Change annual Conference of the Parties (COP21) is set to begin November 30, 2015, and many premiers will be accompanying Prime Minister Trudeau, including premiers from Ontario, Alberta, British Columbia, Manitoba, Quebec, P.E.I. and Nunavut. It will be interesting to follow how the federal government attempts to fold a variety of sub-national GHG emission reduction committees into a comprehensive federal commitment.