Minister's Speech

Remarks prepared for:

The Honourable John Gerretsen
Minister of the Environment

At the 3rd Annual Cap-and-Trade Forum
St. Andrew’s Club and Conference Centre, Conservatory Room, 16th floor

Toronto
Thursday, April 23, 2009, 1:15 p.m

(Check against delivery)

Thank you, Lisa.

(Minister introduced by the program Co-chair Lisa (Elisabeth) DeMarco, Partner, Macleod Dixon, LLP)

Good afternoon, everyone. 

I’m pleased to be able to join you today for the third annual Cap and Trade forum.

Later on this afternoon, you’ll be hearing from Jim Whitestone, from my ministry’s Air Policy Instruments and Program Design Branch. 

Jim will be discussing Ontario’s efforts on cap-and-trade in some detail.

So, in my remarks, I’d like to try putting cap-and-trade into a larger context — by talking about how it fits into our broader Climate Change Action Plan and our approach to build a stronger, more durable economy.

To achieve our greenhouse gas reduction targets, our response must be broad, decisive and well coordinated. 

It must involve governments and businesses and other organizations at all levels and in all sectors.  The need to move forward now is absolutely necessary.

In Ontario, our government understands this is a pivotal time for the province —for our environment, our economy, and the future well being of our people. 

We face two crises: climate change and the global recession.

We recognize that there is an opportunity to lay the foundations for a low-carbon recovery to address the longer term challenges associated with climate change while acting on the financial crisis at the same time.

I think that the general public understands this.  Canadians have been telling us this loud and clear. In a recent Ipsos-Reid poll, people indicated that they want their governments to keep focusing on a healthy environment even during tough economic times. 

This shows that people sense that there’s no going back … that we have reached a significant turning point.
We have to start seizing the opportunities available to build a lower-carbon society.

It is for these reasons our government introduced Ontario’s Climate Change Action Plan in the summer of 2007 – a comprehensive approach to tackling climate change which is now being pursued and adopted in all key sectors which are contributing to green house gas emissions.

The Plan’s GHG emission reduction targets — and related actions — to support economic growth are some of the most ambitious in North America. 

In Ontario, our plan calls for a complete phase-out of coal-fired electricity generation by 2014, along with a whole range of measures that will help foster a culture of conservation. This shows true leadership in a North American political context that is focused on green energy and energy conservation.

This past December we issued the first Annual Report on the status of Ontario’s Action Plan, resulting in the Ontario’s Environmental Commissioner to respond with his own report which stated that “the Action Plan sets a sensible course (e.g. economic incentives for the development of cleaner forms of electricity generation).  This has encouraged the development of more renewable sources of electricity, as well as cogeneration projects that can produce more heat and power.”

We also believe that developing and adopting a fair and effective cap-and-trade system is a necessary strategy towards meeting our GHG reduction targets and building a stronger, more innovative and competitive economy.

But we are convinced it is essential that this be done within the context of a harmonized and broader Canadian, North American, and international approach.

It appears that North America is moving toward a cap and trade approach. However, if cap and trade is to be a truly useful and effective strategy to mitigate climate change, it must not only be designed to be equitable and transparent for all — a model where the same rules and pricing schemes are applied consistently and equitably in every jurisdiction — it must be a system which at the end of the day provides certainty and clarity for all its partners— be it industry and the marketplace, or the jurisdictions involved in its operation.

The importance of a harmonized approach is a key finding of the recently released report by the National Roundtable on the Environment and the Economy, which recommends a broad-based cap-and-trade system to send a clear price signal that provides an incentive to reduce greenhouse gas emissions.

I am pleased to see that David McLaughlin, President and CEO of NRTEE is here to speak about the report.

The report stresses the need for immediate and aggressive greenhouse gas reduction policies and clearly shows that delay will only increase the economic and environmental costs for Canada.

The fact is, Ontario has already taken action by setting ambitious targets for GHG reductions as well as moving forward on a broad-based cap and trade system with clear price signals.

The NRTEE report concluded that a national Cap and Trade system needs to be compatible with and link to emerging U.S. and international cap and trade regimes that are based on real reductions.

We understand that many of the markets and services that give rise to GHG reductions go beyond Ontario’s borders and require coordinated action. That does not mean that Ontario intends to take a back seat and wait for further action by other North American governments.

It is for this reason that Ontario has been working for the past year with Quebec, California and other partners to develop a cap-and-trade program that achieves Ontario’s Climate Action Plantargets.

Last June, we signed a Memorandum of Understanding with Quebec to collaborate on a cap-and-trade system that is consistent with emerging North American cap and trade systems.

Consequently, Ontario and Quebec joined the Western Climate Initiative, or WCI — which is targeting the development of a regional cap-and-trade system by 2012.

The recent Waxman-Markey Bill in the US clearly indicates that WCI is playing an influential role in shaping the design of a North American cap-and-trade system.

The importance of creating a harmonized North American approach has been underscored by recent actions in the U.S.

President Obama very quickly signalled his desire to drive the United States towards a more urgent and aggressive approach to meeting real GHG reduction targets and using a national Cap and Trade system.

It is clear the U.S. President sees immediate actions on climate change as a key driver behind his broader plan to return his country to prosperity.

The U.S. Congress is acting too — as indicated in the Waxman / Markey Draft  Bill. The American Clean Energy and Security Act includes a broad cap and trade system with aggressive reduction targets and measures to “make America the world leader in new clean energy and energy efficiency technologies.”

Because of these rapidly moving developments in the U.S., Ontario – and Canada – must also move decisively, quickly – and smartly – to protect our own interests. 

There are real risks of trade measures for those countries that do not have GHG reduction measures that are complementary to U.S. action.

As an export-driven economy, this could hurt both Ontario and Canada as a whole. The U.S. is by far our most significant trading partner.  Ontario’s exports to the U.S. amount to more than $130 Billion a year – nearly 82% of all our exports worldwide.

Federal leadership is also needed to ensure our industries remain competitive with their U.S. counterparts and are not subject to additional punitive measures at the border.

So, I have been encouraged to see the most recent signals from the federal government to reconsider its intensity-based approach to reducing greenhouse gases – an approach which the Ontario government is convinced is not in our national interests, and which will not see Canada attain the GHG reductions we require.

Just last week, Environment Minister Prentice publicly acknowledged in a media interview that the measures being planned in the U.S. “would have trade-related consequences for Canada if we don’t have equivalent environmental legislation in place” in Canada.

I applaud this shift, and Ottawa’s new realization that Canada needs to adopt regulations and enforcement standards based on a cap and trade model that is likely to be adopted in the U.S.
At the same time, we’re not sitting back. 

Ontario is determined to play a leadership role in developing the cap-and-trade system that emerges in North America, so we can influence the parameters on which the system is based and ensure a level playing field for our industries.

It is almost certain that a new continental carbon market designed to reduce GHGs will emerge. 

Ontario is well positioned to be a significant player in this emerging market.

Toronto is recognized as a North American financial and economic centre with the potential of becoming a key trading centre, thanks in large measure to the expertise of people like yourselves in this room.

For in addition to the challenges posed by cap and trade, there are tremendous economic and growth opportunities for those with the special skills and experience who can help implement an effective commercial trading system.

At the same time, it will help act as a springboard for technological innovations that can propel us into a lower carbon future.

The best possible cap-and-trade system is a totally integrated system, ideally worldwide, but at a minimum, a North American integrated system where the same rules apply to state or provincial jurisdictions.

Last December, our government launched consultations on a cap-and-trade framework for the province that can be integrated with other systems.

Over the past few months, staff in my ministry have held a series of sectoral consultations with affected industries and other stakeholders.

We also released a discussion paper for broad stakeholder feedback. 

In the coming months, the input we have received will be valuable as we continue to work with our partners in Quebec, WCI and other jurisdictions to inform the development of a cap-and-trade system for North America.

At the same time, our government has been clear on the fundamental objectives of the province’s approach.  They include:

• establishing a reliable price signal
• enhancing competitiveness of Ontario Industries
• ensuring a level playing field
• encouraging low-cost GHG reductions;
• avoiding duplication; N
• pursuing absolute GHG reductions, and
• creating green jobs.

Throughout our consultations we heard clearly the need for:

• better clarity and certainty on next steps to help stakeholders get ready for what is coming
• minimal duplication between federal and provincial policies.

I want to assure you that we have listened to your concerns and we are working hard to ensure a consistent approach to cap-and-trade with other jurisdictions.

And that is why we are prepared to work with leading states and other provinces as we move forward on cap and trade.

The next year will be an exciting time on cap-and-trade and climate change as governments all over the world prepare for the next round of international climate change discussions in Copenhagen —which will be the next critical milestone in the global fight against climate change.

I promise you the Ontario government and I will do everything in our power to ensure Canada adopts the best possible leadership role it can at Copenhagen  and exert all the influence we can to help shape and take forward a national strategy we can be proud of — and which also protects Ontario’s interests for a greener, healthier future.

Until then, we will continue to work actively with all sectors, the federal government, other jurisdictions – and key partners such as you.

The world of cap-and-trade is fast approaching — and together we will help create an approach which will ensure Ontario achieves its GHG targets and builds a greener, more sustainable economy.

I hope you enjoy learning more about this important new initiative over the next day and a half—and that you have an enjoyable and productive conference.

Thank you.

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