On April 3, 2017, the Ontario Ministry of the Environment and Climate Change (MOECC) announced the results of the first auction of greenhouse gas (GHG) allowances, held on March 22, 2017.
The results signal a strong start to North America’s newest carbon market with 100% of available current (2017) allowances sold at a settlement price of $18.08 and 26% of available future (2020) allowances sold at a settlement price of $18.07. The auction generated approximately $472 million in proceeds. The revenue generated will be invested in programs that will help Ontario achieve its GHG emission reduction target of 80% below 1990 levels by 2050, in accordance with its Climate Change Action Plan.
The auction was administered by the Western Climate Initiative, with oversight from an independent market monitor to ensure market integrity. Capped participants accounted for the majority of the sales, i.e. 99.1% of current allowance sales and 100% of future allowance sales.
Several large emitters are currently receiving free allowances until 2020 so as to discourage them from moving to jurisdictions with less stringent climate policies, which can lead to a rise in global GHG emissions, a phenomenon termed as “carbon leakage”.
There are 15 more auctions scheduled in the current compliance period which ends in 2020. The next auction is on June 6, 2017. Ontario is expected to link its cap and trade market with Québec and California in 2018.
For more information, please refer to our overview of the Cap and Trade Program in our November 2, 2016 Special Edition of EnviroNotes!
Contact the lawyers at Miller Thomson for more information on how your business may participate in Ontario’s Cap and Trade Program.