Ontario Cap and Trade Update

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Here are the Amendments to the Cap and Trade Program and Reporting Regulations & Service Regulation & Administrative Penalties Regulation

A decision has been made to proceed with amendments to the greenhouse gas cap and trade program, which include changes to the:

  1. Cap and Trade Program Regulation (O. Reg. 144/16)
  2. Methodology for Distribution of Ontario Emission Allowances Free of Charge
  3. Quantification, Reporting and Verification of Greenhouse Gas Emissions Regulation (O. Reg. 143/16)

Comments from ORTECH Consulting:

  • Amendments to the cap and trade regulations are being adopted in order to successfully implement and operate a linked cap and trade program. 
  • Recognizing compliance instruments from California and Quebec and allowing trading between registered participants in all three jurisdictions;
  • Enabling joint allowance auctions to be held by all three jurisdictions;
  • Setting an Ontario minimum annual auction price beginning at $13.75 CAD in 2017 and escalating each year by five percent plus inflation;
  • Expanding the holding limit to account for the size of the larger linked market;
  • Expanding the purchase limit to account for the size of the larger linked market;
  • Allowing registration in multiple jurisdictions for mandatory, voluntary and market participants;
  • Clarifying and extending requirements regarding "related persons" to persons who are registered in Quebec or California; and
  • Expanding the director’s authority to cancel the registration of a market participant under specific circumstances related to contraventions and convictions.

The proposed caps decline from 124.7 Mt in 2020 to 88.5 Mt in 2030, declining by 3.6 Mt per year or at an average annual rate of 2.9 percent. This rate of decline is less steep than the 4.17 percent rate of decline during the 2017-2020 compliance period.

Allocation will be addressed separately through post-2020 program design process.

If you have any questions regarding this article, please contact Scott Manser at smanser@ortech.ca or 519 -966-8798