Ontario Cap and Trade

Hiatus of the Ontario Cap and Trade Program

On October 31, 2018, the Ford government of Ontario legislated the cancellation and dismantling of Ontario‚Äôs cap and trade (C&T) program. We remain optimistic that the cancellation is more of a hiatus than a termination because the fight is not over. 

There are pending lawsuits and class-action lawsuits against the Ontario government, including an appeal under NAFTA (the North American Free Trade Agreement). The Ontario government has already committed a maximum of CAD$30 million to legally challenge the federal government to impose a carbon tax on provinces, but dealing with these lawsuits are extra.

Starting in 2019, the federal carbon tax for Ontario looks very similar to the cancelled C&T program.  This is because industries in the province successfully lobbied the Canadian government to keep the features of C&T (although it is not as transparent and accountable as was the Ontario C&T). In other words, businesses participating in the C&T program liked it enough that they wanted to keep it.

We believe that market participants like SMV Energy Solutions will still have a role in a market-driven program that has been proven to be the best at dramatically reducing greenhouse gas emissions and shifting the economy to be less energy intensive that also creates significant job growth.

It is a matter of time before the Ontario government will miss the billions of dollars of regular revenue that the C&T program brought.  With the federal carbon tax, the federal government will likely by-pass the Ontario government, and deal directly with municipalities to spend the collected carbon tax on climate change mitigation projects.

Lastly, climate change is happening now, and getting worse exponentially. Sadly, the Ontario government is losing valuable time to help people, businesses, and the environment prepare for the disruptions caused by severe weather events that are caused by climate change. We remain hopeful that soon the Ford government will replace the cancelled C&T program with exactly the same program but with the modification of adding a carbon tax dividend payable to all Ontario taxpayers.  

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