On Friday, September 22nd 2017, Ontario signed an agreement that will merge their cap-and-trade market with the already joint market of Quebec and California. This agreement will come into effect on January 1st, 2018, meaning that there will only be one more sole Ontario auction held on November 29th, 2017, and will create the world’s second largest carbon market. Starting in the new year Ontario will work with Quebec and California to standardize the regulations of the auction and host joint auctions.
The Canadian Government has expressed that carbon pricing is a priority and stated provincial governments must take action. Ontario and Quebec are leading the Canadian Provinces, with Nova Scotia set to unveil its cap-and-trade program sometime this fall. Quebec’s Premier Phillipe Couillard stated that “60% of the world GDP [will] soon be covered by a carbon market.” and claims that this is the way the world is going, even if there is some pushback from industry or branches of Government.
Overall carbon pricing is not a new concept, but the recent expansion of cap-and-trade markets has shown that its popularity and demand is on the rise. The long-term effects of carbon pricing are yet to be seen, however benefits to the environment and sustainable development are both positive outcomes. The only negative in a carbon market is the cost that gets put back onto consumers. In Ontario the cap-and-trade market has increased gas prices by an extra 4.3 cents per litre, and increased home heating costs by an extra $80 per year. These are just the direct cost increases, not including the indirect cost increases in products from the carbon market that are passed on from businesses to consumers.
In order to stay competitive in Ontario, and in a global economy that is increasingly environmentally aware, is to adapt and plan for the future. Companies in Ontario can work on improving their processes, updating equipment, and working with offset credits to reduce their carbon footprint. All of these changes are reasonable, however many are costly. Certified Energy Managers, like those at Canadian Energy Strategies, can work with your company to identify areas of improvement and provide insight on the carbon market.