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2015 was a ground-breaking year for climate change regulation in Ontario. The province made several announcements regarding plans and strategies for how to best lower greenhouse gas emissions in order to meet targets in the coming years.
1. Ontario Joins Cap and Trade Program
On April 13, 2015, Ontario announced it will join the carbon cap and trade system under the Western Climate Initiative. The system will set a ceiling on the amount of pollution allowed from most sources within the province, with the ceiling being lowered over time to meet targets. The initial cap is set to come into force on January 1, 2017.
2. Proposed GHG Reporting Regulation Amendments
On September 14, 2015, the Ministry of Environment and Climate Change (MOECC) proposed amendments to the Greenhouse Gas Emissions Reporting Regulation. The proposed amendments would:
- require emitters of 10,000 tonnes or more of carbon dioxide equivalent per year to report and verify emissions data;
- divide emission sources into those requiring reporting only and those requiring third party verification;
- add petroleum product suppliers and natural gas distributors to the Regulation in 2016 to support the cap and trade program; and
- add other sources to the reporting regulation including electricity imports, transmission and distribution, equipment used for natural gas transmission, distribution and storage, and magnesium production.
3. MOU regarding Western Climate Initiative
On December 7, 2015, while attending the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change (COP21), Ontario, Quebec and Manitoba Premiers and their respective environment ministers signed a memorandum of understanding to facilitate their intent to link cap and trade programs in each province under the Western Climate Initiative. This means that five Canadian provinces, representing 90% of the population, will now have some form of carbon pricing mechanism.
4. Long-Term Climate Change Strategy
The Ontario government unveiled its long-term climate change strategy on November 24, 2015, setting out how Ontario intends to meet its greenhouse gas emissions reduction targets of 15% below 1990 levels by 2020, 37% below 1990 levels by 2030, and 80% below 1990 levels by 2050. The cap and trade program is the main tool by which Ontario intends to meet these targets. To meet the 2020 target, the province will be expected to decrease the cap on allowable emissions by roughly 3.7% per year. The MOECC intends to take a sector-level approach to cover as much of Ontario’s greenhouse gas emissions as possible.
The program purports to cover both combustion and fixed process emissions. Large or industrial emitters over 25,000 tonnes would be covered at the facility level, encompassing over 140 facilities in the province. For electricity generation, transportation fuels, and natural gas, regulations will be applied at the distributor level, if certain thresholds are met.
Canada was one of 196 countries that participated in COP21 in Paris from November 30 to December 12, 2015 with hopes of establishing post-2020 climate change targets. There was much speculation leading up to the Conference about whether any legally-binding agreement would emerge.
Notably, the French Foreign Minister invited Canada’s Environment Minister, Catherine McKenna, to act as one of fourteen co-facilitators to help facilitate final negotiations on the deal. Minister McKenna came out as supporting a goal to limit global warming to 1.5 degrees Celsius, emphasizing the importance of an ambitious agreement signed by the greatest number of countries possible. This was a significant move for Canada and one that demonstrates a new commitment to real progress.
Topics receiving particular attention at COP21 included whether the target for limiting global warming should be 1.5 or 2 degrees Celsius, the responsibilities of developing versus developed countries in terms of cutting greenhouse gas emissions, and the role of developed countries in assisting developing countries adapt to the consequences of rising temperatures.
Facilitators worked late into the night in the final days of the Conference, and on December 12, an Agreement was finalized. Notable outcomes of the Paris Agreement include:
- Emphasis on the need to limit the increase in global average temperature to “well below 2°C above pre-industrial levels” and pursue efforts to “limit the temperature increase to 1.5°C”
- Parties are to aim to reach peak greenhouse gas emissions as soon as possible
- A difference in expectations and requirements for developed versus developing countries
- Mandatory five-year reviews of the implementation of the Agreement in the form of a “global stocktake”
- Encouragement of developed countries to take the lead in mobilizing climate finance beyond previous efforts, and requiring the provision of financial resources to assist developing countries with respect to mitigation and adaptation strategies
- Inclusion of transparency requirements intended to build “mutual trust and confidence and to promote effective implementation”
- Creation of a non-adversarial and non-punitive compliance mechanism to facilitate implementation of and promote compliance with the Agreement
While the submission and review of emission reduction targets provided for in the Paris Agreement is legally binding within the United Nations framework, emission targets themselves are not. The targets are to be determined individually by nations as Intended National Determined Contributions (INDCs); thus far, 188 countries have contributed INDCs to the Agreement.
Some criticisms of the Paris Agreement include the fact that it will not take effect until 2020, and that the global stocktake will not take effect until 2023. These time lags could have significant impact on the ability to limit global warming to 1.5 degrees Celsius; however, there is still work mandated in the Agreement to be done before then. This work includes engaging in dialogue and processes on mitigation and adaptation opportunities, and creating a plan to finance $100 billion USD annually by 2020 to help developing countries build capacity and move toward cleaner energy sources.
The Agreement will be open for signature at UN headquarters in New York for one year, beginning April 22, 2016. It must be ratified by at least 55 countries, representing 55% of the world’s greenhouse gas emissions.
Looking to what lies ahead for Ontario, Prime Minister Trudeau has promised to speak with Premiers within 90 days of COP21 to set national targets. According to Minister McKenna, the current federal target of cutting greenhouse gas emissions by 30% below 2005 levels by 2030, made under the previous Conservative government, will act “as a floor, not a ceiling”.
A draft regulatory proposal for Ontario’s cap and trade program is set to be tabled in early 2016.