With California Governor Jerry Brown still basking in this week’s deal to extend his state’s landmark cap-and-trade program through 2030, Ontario Environment and Climate Minister Glen Murray is warning that the fine print in the new system “may allow oil refiners and power generators to spew carbon dioxide into the air on the cheap,” Bloomberg reports.
The discussion matters, since Ontario is one of several jurisdictions that have agreed to coordinate their carbon markets through the California-led Western Climate Initiative.
The deal adopted by California “allows emitters to bank unused carbon permits, giving them more time to release emissions without paying extra,” Bloomberg notes. “Ontario would have them sunset, after which they’d lose all value.” And Murray is adamant that that’s exactly as it should be.
“You just don’t want backdated allowances floating around the market,” he said. “We know we have the option to retire them, even if they don’t.”
New market rules may still shift the value of backlogged allowances in California through 2030 or set limits on how long a company can hold them, said San Francisco-based carbon trader Alex Rau of Abatement Capital LLC. “This is an extension rather than a wholesale reworking of climate policy,” he told Bloomberg. And Murray stressed that the provision would not be a deal-breaker for Ontario.
“We’re not longing for the days of coal and going back to an economy that doesn’t exist,” he said. “Going down that road would be a dead end. We see the future as an economy based on resource recovery, not new resource extraction.”