The long wait is over; today Ontario finally announced that it will implement a carbon price (a cap-and-trade system), and I am very pleased with this development.
Ontario first joined the Western Climate Initiative in 2008 and a team of dedicated staff has been contemplating a cap-and-trade system ever since. The MOE (as the MOECC was then known) posted a carbon pricing discussion paper to the Environmental Registry in January 2009 (Environmental Registry # 010-5484) and a second follow-up proposal in May 2009 (Environmental Registry # 010-6740), but a final decision was never posted by the ministry.
Due to the ECO’s role in reporting on the province’s progress in reducing its greenhouse gas (GHG) emissions (see my annual GHG progress reports), the ECO has accumulated years of commentary on the subject of carbon pricing. Here’s a brief history of our efforts and suggestions.
The ECO’s 2010 GHG progress report explained that the ECO “supports government efforts to put a price on carbon emissions, but remains agnostic” on the mechanism. The 2010 report provides an overview of both pricing instruments (carbon tax or cap-and-trade) from the standpoints of: 1) emissions reduction certainty and price certainty; 2) administrative oversight; 3) transparency; and 4) implications for the transition to a low-carbon economy. The 2010 report also outlines the Western Climate Initiative and B.C.’s experience with a carbon tax. The report concluded by recommending one important condition for whichever carbon pricing policy instrument that Ontario chooses: that it be based on a full public review to compare emissions trading and a carbon tax in terms of their efficacy in providing a transparent price signal to the economy.
The following year, my 2011 GHG Progress report urged the provincial government to stop delaying and implement a carbon pricing mechanism sooner rather than later. This report also addressed two important concerns that had been raised about any potential carbon pricing mechanism: carbon leakage and so-called “trade-exposed industries.” Subsequently, I blogged about why a carbon price is actually good for Ontario industry.
More recently, in November of last year, I wrote a blog making a case for the potential of a carbon tax to effectively reduce GHG emissions in Ontario.
Although carbon pricing has been a slow train coming, based on the government’s renewed commitment to climate change (see The Road to Paris is paved with subnational intentions), I’m optimistic that Ontarians will finally see this policy implemented.