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Cap and trade: what you need to know

UPDATE: The new Ontario government scrapped the cap-and-trade program in the summer of 2018. The federal government has announced its carbon pricing plan to replace it; stay tuned for more details.

Ontario's new Cap and Trade program came into effect on January 1, 2017. The program is designed to reduce greenhouse gas emissions (also known as CO2 emissions) by placing a “cap” on the amount of emissions a business may produce.

What are my obligations in 2017, if any, under the Cap and Trade Program?

This year, any company that produces 25,000 tonnes or more of CO2 emissions must participate. These mandatory participants are subject to reporting requirements required by law to participate in quarterly auctions where they may purchase carbon allowances/offset credits. 

Businesses that produce 10,000 to 25,000 tonnes of CO2 emissions in 2017 are subject to reporting requirements, but are not required to participate in the carbon offset credit auctions. However, they may enter the auctions as a “voluntary participant”.

Businesses that produce less than 10,000 tonnes of CO2 emissions are not required to report or participate.

The first auction will take place in March 2017. All 2017 auctions will be open to Ontario businesses only. Beginning in 2018, the market will be opened up to businesses in Quebec and California.

In addition, the government has proposed to allow people, companies and organizations to claim offset credits for projects that reduce or remove greenhouse gases and meet the requirements detailed in offset protocols.

How is the Cap and Trade Program Affecting your Business?

If your business is not obligated to participate based on its annual CO2 emissions, the program might still affect your bottom line in other ways.

  • The price of gasoline increased by 4.3¢/litre.
  • The price of natural gas increased by approximately 3.3¢/cubic metre.

What is CFIB Doing?

CFIB is closely monitoring the program, including the potential ripple effect on businesses. We are also watching for any impacts on Ontario's electricity system, and whether the government will meet its projected revenue and emissions reduction targets.

For further information, please contact Business Resources, or visit the Ministry of the Environment and Climate Change’s website here.

October 24, 2018

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