Ontario’s Liberal government had a recently rare bit of good news this week, announcing that it had sold all the available carbon emission allowances in its first cap-and-trade auction and raised C$472 million in revenue.
Ontario’s climate plan places caps on the carbon pollution that electricity importers, natural gas distributors, and fuel suppliers can emit, CBC News explains. “If they exceed those limits, they must buy an equal number of credits—or allowances—at auction, or from other companies that come in under their limits.” Other large emitters may also buy allowances on a voluntary basis, as some do to buff corporate green cred.
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The permits sold last month drew bids of just above $18 per tonne of permitted carbon emission.
Ontario “hopes the quarterly auctions will bring in $1.9 billion a year,” CBC notes, “to be invested in programs that reduce emissions and help businesses and consumers adapt to a low-carbon economy.” In a release accompanying the sales announcement, the government restated its goal of cutting greenhouse gas emissions 15% below 1990 levels by the end of this decade.
“This is a strong showing of the first run” auction, the Clean Economy Alliance wrote in a statement applauding the results. (Disclosure: The Energy Mix’s parent firm, Smarter Shift, is a member of the Alliance.) “The province can now get moving on a home energy retrofit program, the electrification of rail lines, the cycling strategy, and the other programs in Ontario’s Climate Change Action Plan that will be funded by cap-and-trade revenues.”
The auction was held within the Western Climate Initiative (WCI) common carbon credit market, which also includes Quebec and California. Mexico and Manitoba have signalled they may also join Ontario in carbon permit trading.
The province’s news release made a point of observing that “after introducing its cap-and-trade program and putting a price on carbon, California’s economy grew at a pace that exceeded the growth of the rest of the U.S. economy,” creating more jobs than the U.S. average within 18 months.