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Ontario Drifts Toward Cap and Trade


Ontario Drifts Toward Cap-and-Trade  

Tom Markowitz - Sunday, October 02, 2011

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Ontario Drifts Toward Cap-and-Trade

On October 6th, the voters of the Canadian province of Ontario will go to the polls to choose their elected Members of Parliament in all 107 seats in the Ontario Legislature. The details of parties and programs suggest that the results of the election may nudge Ontario into a cap-and-trade system for greenhouse gases.

At the time of the dissolution of the previous (Liberal) Government, the party standings in the Legislature were:

Liberals                                  70 seats
Progressive Conservatives      25 seats
New Democratic Party (NDP) 10 seats
Vacant                                     2 seats

Current polls indicate that the Liberal Party will lose seats in the October 6th election, but will remain the party with the most seats.  On September 26th, the Globe and Mail predicted the following seat totals in the October 6th Election:

Liberals                                 55 seats
Progressive Conservatives     32 seats
NDP                                      20 seats


In the situation predicted by the Globe, the Liberals would form the next Government, with a majority of only two seats (after appointing one Liberal Member of Parliament to be the Speaker of the Legislature.)

(The actual results on October 6th may differ from the Globe’s forecast.)

Surprisingly enough, these forecast election results would favour the creation of an Ontario cap-and-trade system for greenhouse gases, even though cap-and-trade has been mentioned only once during the election campaign. Let’s review the history of cap-and-trade in Ontario, and the attitudes of the three parties toward cap-and-trade.

All three major parties agree that climate change and greenhouse gas emissions are an environmental problem that must be addressed. All three major parties have pledged to close all coal-fired electricity in Ontario by 2014.

Progressive Conservatives
Led by Tim Hudak, the Tories are, “the only party not raising taxes.” The Ontario Tories are wary about cap-and-trade, but do not subscribe to the rabid anti cap-and-trade slogans of conservatives in the USA. When the Liberal Government introduced the cap-and-trade bill in the Ontario Legislature, on May 27, 2009, the Tory response was, “We must ensure that cap-and-trade does not become cap-and-tax. We must ensure that it does not become a green tax.”


A little-known fact: a Tory government introduced Canada’s first cap-and-trade program, in 2001. Ontario’s cap-and-trade program for NOx and SO2 from electricity generators (Ontario Regulation 397/01) (later extended to industrial facilities) was a success, until the edict of the new Liberal Government in 2003 to close coal-fired electricity stations reduced NOx and SO2 emissions by capped facilities far below the caps established in the original 2001 regulation, making the original 2001 cap-and-trade system redundant.

Led by (current) Premier Dalton McGuinty, the Liberal Government has espoused cap-and-trade for greenhouse gases, but is faltering in its commitment to deadlines. The Liberals became the Government of Ontario in 2003.

In June, 2008 the Provinces of Ontario and Québec signed a Memorandum of Understanding, pledging to work “co-operatively and with other provinces, territories and states on the design and implementation of a joint regional market-based multi-sector greenhouse gas cap and trade system, based on real reductions that could be implemented as early as January 1, 2010.”


In July, 2008, Ontario joined the Western Climate Initiative, a greenhouse gas initiative of 7 US States and 4 Canadian Provinces. The WCI has been planning a WCI-wide greenhouse gas cap-and-trade system since 2007.


Partners in the WCI have committed to reducing their greenhouse gas emissions to 15% below 2005 levels by 2020. The target date for the start of the WCI cap-and-trade system is January 1st, 2012.

In December, 2009, the Liberal Government passed a new Bill, amending the Environmental Protection Act, enabling the Ministry of the Environment to establish regulations for a greenhouse gas cap-and-trade program.


In December, 2009, the Government of Ontario passed a new Regulation 452/09, requiring stationary sources to monitor and report their greenhouse gas emissions. The new Ontario regulation is a mirror of the federal government’s Greenhouse Gas Emissions Reporting Program, and a repeat of Ontario’s OnAIR emissions monitoring and reporting system, which was absorbed by the federal government’s system in 2004.

At the beginning of the 2011 election campaign, the Liberals did not mention cap-and-trade. However, a “carbon tax” incident on September 20th caused the Liberals to mention that a cap-and-trade system is still under consideration.

On September 20th, Liberal Candidate (and former Parliamentary Assistant to the Minister of Energy) Dave Levac mentioned to a reporter from the Brantford Expositor that, “there is a possibility that a carbon tax is on the table, because it currently is.”


At the end of the chat and later in an official statement, Levac corrected himself, saying he confused “carbon tax” with a “cap-and-trade” system.


The following day, Premier McGuinty was grilled by reporters about a cap-and-trade system for Ontario.

When asked about the possibility of an Ontario cap-and-trade program for greenhouse gases, McGuinty responded that Ontario is not ready for cap-and-trade. "We're not going to get into a cap-and trade system unless we get the right kind of cap-and-trade ... one that's going to benefit Ontarians," McGuinty said during a campaign stop in Belleville, Ont.


The “social democrat” New Democratic Party is led by Andea Horwath. The NDP was the Government of Ontario from 1990 until 1995. In the current provincial election, the NDP has momentum, and is expected to more than quintuple its total number of seats in the Ontario Legislature.

In the 2011 election, the NDP’s party platform proclaims in bold letters, “we will join the Western Climate Initiative so Ontario firms can trade into a continental cap and trade plan.”


Mechanics of a Minority Government
In Ontario’s parliamentary system, the Government can survive as long as the Members of Parliament “have confidence” in the current Government. If the Government loses a vote in the Legislature, the Opposition can move for a “vote of non-confidence.” If a majority of Members vote “Yea” for a vote of non-confidence, the Government falls, and the Lieutenant-Governor can dissolve the current Government, and call a new general election.

In a minority government, the Government Party in power does not have enough seats to win votes, unless enough opposition Members vote with it.  The Government is constantly in danger of losing a vote, and then losing a vote of non-confidence. A minority government can hope to stay in power by courting the support of a small party, so that the combined votes of the Government and the small party are greater than the votes of the remaining Opposition.

Apparently, during the next Government of Ontario, the Liberal Government will be a minority government, or will have a very slim majority, and will need the support of the NDP, in order to survive in the Legislature for several years. The NDP are the party with momentum, and may be eager for another election in one or two year’s time, unless appeased by Liberal policies which agree with the NDP’s own platform.

This minority situation, depending on the support of a pro cap-and-trade NDP, may push the new Liberal Government to proceed with the Ontario greenhouse gas cap-and-trade program, despite Premier McGuinty’s reticence.


A well-designed greenhouse gas cap-and-trade system for Ontario would reduce greenhouse gas emissions, and would benefit Ontario’s economy, creating jobs while reducing imports of fossil fuels.

What is a well-designed cap-and-trade system? The web site www.Enerhope.com describes an ideal cap-and-trade system, which could achieve its objectives without falling into the mistakes that have damaged the Waxman-Markey and RGGI systems in the USA.

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