On February 12, 2015, the Ministry of the Environment and Climate Change released Ontario’s Climate Change Discussion Paper (the Paper), which identifies the risks and challenges associated with climate change and the threat it poses to Ontario. The Paper also outlines Ontario’s long-term visions for reducing greenhouse gas emissions, most notably by establishing a carbon pricing policy in Ontario. “A well-designed carbon pricing system is the most cost-effective approach to reducing greenhouse gas emissions,” the Paper states. “Carbon pricing reduces greenhouse gas emissions as businesses and households incorporate the cost of emitting carbon into their decisions, encouraging companies and consumers to move away from fossil fuels and towards cleaner and more efficient ways of going about their business.” The Paper outlines four approaches to carbon pricing:

  1. A Cap-and-Trade System, which places a cap, divided into permits, on the amount of greenhouse gases that can be emitted in a given period. Emitters must acquire enough permits to match their emissions, and those that have reduced emissions can sell extra permits to those that require more. The auctioning and trading of permits establishes a carbon price, which fluctuates over time.  
  2. A Baseline and Credit System,where a baseline intensity is determined for each emitter, which is then required to improve its efficiency by a set amount (i.e. reducing greenhouse gas emissions by 10% per barrel of oil produced). Emitters that overachieve can obtain credits that can be sold to other businesses that exceed their limits.
  3. A Carbon Tax, where a charge is applied to each unit of greenhouse gas emitted.  
  4. Regulations and Performance Standards, requiring businesses to meet standards or targets or to use specific technologies to reduce greenhouse gas emissions.

Currently, Quebec utilizes a cap-and-trade system while British Columbia has a carbon tax.

In addition to emphasizing the importance of placing a price on carbon, the Paper also outlines three other critical policy areas that are essential to achieving Ontario’s greenhouse gas emissions targets:

  1. Take action in key sectors – reducing greenhouse gas emissions in major polluting sectors, including transportation, buildings, electricity, industry, agriculture and waste.  
  2. Support science, research and technology – investing in science and technology to improve efficiency and help spur the uptake of carbon-reducing technologies.  
  3. Promote climate resilience and risk management – integrating climate change considerations in key infrastructure and asset planning decisions.

The Paper invites citizens, businesses and communities to engage in a discussion on climate change, reducing greenhouse gas emissions and maintaining strong economic growth. The Paper has been posted for a 45-day public review and comment period, with town hall meetings to be held across the province.