Building Ontario’s low carbon economyNew climate change legislation lays solid foundation for climate success

Has Canada’s race-to-the-top on climate action begun in earnest?

Yesterday, the Ontario legislature provided royal assent to a new piece of legislation, Bill 172, to enable an economy-wide carbon price through cap-and-trade. This legislation lays the groundwork for the province to achieve its 2020, 2030 and 2050 emissions reductions targets, which it has also embedded into law. Cap-and-trade is a market mechanism designed to find cost effective means to reduce carbon pollution. The legislation sets a limit on Ontario’s emissions, which declines at a known rate each year, and allows market participants to trade permits with each other to achieve the province’s now legislated GHG reductions. With this program in place, some participants will invest to reduce emissions and will sell their excess permits on the market, and others will purchase permits if they emit more pollution than allowed by the cap. In the end, all participants should hold enough permits to cover their emissions, and carbon pollution should steadily decline in line with the province’s climate targets.

In addition to its cap-and-trade program, the Government of Ontario plans to launch a suite of complementary policies and initiatives to reduce the province’s carbon footprint and improve the lives of Ontarians. Ontario’s climate action plan will be designed to ensure the province achieves its 2020 reduction target and is on track to achieve deeper reductions in 2030 and beyond. It is yet to be released publicly, but according to leaked information obtained by the Globe and Mail, it contains a host of new climate measures to drive down the province’s emissions. From a low-carbon fuel standard, to incentives for electric vehicles and building code reforms, the leaked version of Ontario’s climate action plan sounds like it’s designed to impress. 

Ontario’s climate action in context

All of this is exciting news for Ontarians, who can feel confident that the province will step up to fight climate change and build a stronger, more diverse economy in the process. But it’s good for Canada too: the federal government has established a new process to build a pan-Canadian climate plan, designed to meet or exceed the country’s 2030 climate target. In order for this new federal approach to be successful, each province and territory needs step up and do more to reduce carbon pollution. With a cap-and-trade program in place and a suite of complementary measures akin to those outlined in the leaked climate plan, Ontario would set itself up to make a significant contribution to this pan-Canadian process.

This is important, because Ontario is Canada’s second most polluting province. According to data from Environment Canada, Ontario’s emissions in 2014 were 170 million tonnes, with the transportation sector being the largest emitter.  In this context, it makes a lot of sense for the government to launch electric vehicle incentive programs, to beef up funding for transit and cycling infrastructure, and to introduce low-carbon fuel standards to reduce combustion emissions from transportation. These kinds of policies would demonstrate that Ontario is serious about finding deep reductions in its highest polluting sector – and in this new era of climate action, that’s a key metric of success.

Innovation and investment to support decarbonization

We are pretty used to governments setting emissions reduction targets, and then not following through with clear plans to deliver. Ontario’s targets of 15 per cent reduction by 2020, 30 per cent reduction by 2030 and 80 per cent reduction by 2050 (all below 1990 levels) will require the government to transform the fundamental building blocks of the economy. Hitting these targets can’t be achieved through incremental policy improvements: they require big bold actions to spur innovation, investment and new kinds of job creation.

Thankfully, Ontario has experience in this department: its provincial coal phase-out remains the most effective climate policy in North America, and required significant government coordination and effort to achieve. But in order to hit its 2030 and 2050 climate targets, Ontario needs a plan to continue down the path of decarbonization. The leaked climate plan includes two proposed targets to phase-out natural gas for home heating: a timeline of 2030 for new building, and 2050 for existing buildings. Natural gas companies may not be thrilled about these targets, but to achieve an 80 per cent reduction in carbon pollution by 2050, Ontarians need to have an explicit conversation about transitioning away of fossil fuels. And, as spelled out in Bill 172, the province has indicated its climate action plan will assess the impact of these climate policies on low-income households and will provide financial assistance to minimize any economic dislocations associated with the plan.

So, we’ve got to ask again: has Canada’s race-to-the-top on climate action begun in earnest?

With Ontario’s new carbon pricing legislation in hand, and rumours of more big changes to come, it is positioning itself as a fully engaged participant in the country’s pan-Canadian moonshot on climate change. We look forward to working with the government as they launch these new climate change measures.