Ontario has released a proposed new statute called the Climate Change Mitigation and Low-Carbon Economy Act, 2016 (the Climate Change Act). The Ontario government also released the Cap and Trade Regulatory Proposal (the Cap and Trade Regulation) and a Revised Guideline for Greenhouse Gas Emissions Reporting (the Reporting Regulation).

Comments on the Climate Change Act may be submitted to the government until March 25, 2016. Comments on the Cap and Trade Regulation and the Reporting Regulation may be submitted until April 10, 2016.

Ontario is developing new climate change regulation as part of a process to join the Western Climate Initiative. The Western Climate Initiative includes Quebec and California among its member jurisdictions.

The Cap and Trade Regulation includes policy positions regarding a number of key cap and trade typical program elements, including:

  • Greenhouse gases (GHG) emission caps
  • Mandatory and voluntary market participants registration processes. The regime is expected to cover approximately 150 emitters including large industrial facilities, petroleum product distributors and electricity importers
  • The initial compliance period will begin January 1, 2017, and end on December 31, 2020, with successive three-year compliance periods thereafter. Regulated emitters must retire emission credits equal to their actual emissions during a compliance period
  • Certain emitters are to receive free emission allowances, particularly those emitters whose businesses are carbon-intensive and trade-exposed
  • Future credit linkages with Quebec and California will be designed so as to allow emission credits to be traded across the jurisdictions
  • Compliance emitters will likely be able to use qualifying offsets for up to eight percent of their compliance obligations which keeps Ontario in line with Quebec and California
  • Participants may apply for early action credits for the period between January 1, 2012, and December 31, 2015

It is expected the proposed regime will generate approximately $1.8-1.9 billion per year in new revenue which will be paid into a Greenhouse Gas Reduction Account which, in turn, will be used for GHG reduction initiatives.