Minister's Speech

Remarks prepared for:

The Honourable John Gerretsen
Minister of the Environment

Carbon Finance Training Seminar
Metro Room One
Sheraton Centre, Toronto

(Check against delivery)

Good morning, everyone. 

I’m pleased to be able to join you this morning.

Today, we face a global environmental threat — unlike any our generation has ever known.

People, here in Ontario and all around the world, are deeply concerned about climate change, and they are looking to their governments to take real and substantial actions to address it.

It will take bold action and a range of strong, concerted efforts from every level of government and across every sector of society to tackle this challenge.

That is why our government has made tackling climate change our most critical environmental priority.

It is why we introduced our Climate Change Action Plan back in 2007 — with bold, ambitious greenhouse gas reductions targets, in line with the some of the leading jurisdictions in North America; six per cent below 1990 levels by 2014 and 15 per cent by 2020.

It is an aggressive and comprehensive approach to reducing greenhouse gas emissions while transforming Ontario into a globally competitive, low-carbon economy. 

We need to move forward with bold, decisive action.

This is a critical time for Ontario — for our environment, our economy, and the future well being of our people. 

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

At the same time, we have the opportunity to lay the foundations for a low-carbon recovery that will help us address climate change and build a green, sustainable economy.

Developing and implementing a fair and effective cap-and-trade system is an essential step towards meeting our GHG reduction targets and transforming Ontario’s economy to be stronger, more innovative and more competitive.

Cap and Trade Approach

At the same time, it is essential that we do this within the context of a harmonized and broader Canadian, North American, and international approach.

To ensure cap and trade is a useful and effective strategy to mitigate climate change, it must 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 that provides certainty and clarity for all its partners— for industry and the marketplace, and for the jurisdictions involved in its operation.

North America is moving towards a cap-and-trade approach.

Ontario has been working for the past year with Quebec, California and other partners to develop a cap-and-trade program that would help us achieve 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 joined the Western Climate Initiative, or WCI — which is targeting the development of a regional cap-and-trade system by 2012.

The WCI is playing an important role helping inform U.S. and Canadian federal cap and trade policy development. 

Much work is underway through the WCI to support implementation of cap and trade, such as work on offsets, which will be an important compliance tool.

Cap and trade also needs to work in conjunction with a range of complementary policies to achieve reductions at lowest possible costs. 

The Green Energy Act and our investments in transit are good examples of these types of complementary policies.

Bill 185

In order to be ready, we have introduced proposed enabling legislation that would allow us to regulate greenhouse gas emissions produced by industry.

Bill 185, if passed, would allow us to move forward with regulations to implement a broad and effective cap-and-trade system for greenhouse gases.

It would provide the authority to set up an emission trading system that would allow us to link to other trading systems, such as the one that is being developed through WCI and the U.S., as well as other international trading systems.

And it would allow us the flexibility to respond as new developments unfold, both here in Canada and in the U.S.

Key to our proposed approach is the establishment of a fair and equitable system that would achieve absolute emissions reductions and provide certainty and clarity for industry, for the marketplace and for all the jurisdictions involved.

When we introduced Bill 185, we also released a discussion paper, “Moving Forward: A greenhouse gas cap-and-trade system for Ontario” which was posted for comment on the Environmental Registry for 60 days.

It laid out the details and options for elements of a proposed cap-and-trade system and provided the basis for further consultations with industry sectors.

We recently released draft reporting regulations, a key step towards the implementation of a cap-and-trade system. 

These are closely aligned with new U.S. reporting rules and we are also working closely with the Canadian federal government to avoid any duplicate reporting requirements. 

They also include a requirement for 3rd party verification to provide confidence in the reported data to support a trading system.

And in September, along with Quebec, we hosted a workshop on benchmarking as a tool to aid in the allocation of allowances under cap and trade.  The workshop brought together government and industry experts from North America and Europe to share best practices and experiences. 

Other workshops  and  joint  consultations  will  be held  with  Quebec  and  our other WCI  partners  on issues  that  will  inform  program  development during 2009/10. 

We will also be working with Quebec to develop a registry for cap and trade, on regulations development and cap-setting.

Working with industry to get it right

We have been listening to industry stakeholders; through our early consultations and ongoing discussion throughout the summer.

Ontario’s industry leaders, particularly our largest industries and largest emitters of greenhouse gases, are an integral part of developing a successful and effective cap-and-trade approach — and their responses and feedback are helping us build a system that works for our industries and for Ontario as we move forward.

Their continued involvement and input is extremely valuable to ensure we get the fundamentals right.

When meeting with industry stakeholders from around the province, I heard loudly and clearly that they believe we have a shared responsibility to deal with climate change.

They want to help Ontario meet its greenhouse gas reduction targets … they understand that doing so is critical to building a new, green economy and a sustainable low-carbon future.

They are telling us we need to align Ontario’s program with the emerging North American system and that the scope of the system should be as broad as possible.

They are telling us we need to work with the federal government to harmonize reporting requirements to avoid overlap and duplication with federal regulations.

They want to ensure there is a system put into place that will be fair and equitable to all.

They are telling us that, above all, what they need is certainty and clarity on what will be asked of them. 

Opportunities arising from Cap and Trade

Once a fair and effective system is established, Ontario business, and particularly the Toronto market, will benefit through trading opportunities. 

With its capital and entrepreneurial spirit, Toronto is very likely to become a trading hub and a centre for carbon finance.

The city is recognized as a North American financial and economic centre, and will continue to be thanks in large measure to the expertise that you in this room are acquiring through this program at U of T. 

Of course, you are here because you already understand the opportunities coming out of emerging carbon markets.

Cap and trade can act as a springboard for technological innovations that can help propel us into a lower carbon future.

It will stimulate jobs related to carbon trading, for lawyers, brokers, accountants, verifiers, and auctioneers, just to name a few.

There are tremendous economic and growth opportunities for those with the special skills and experience who can help implement an effective commercial trading system.

In the short-term, we’re preparing for Copenhagen but ever-mindful of the current situation internationally and domestically.   We will continue to work with all our partners … with industry stakeholders … with other provinces and states … and with the federal government to move forward on a robust approach to reduce greenhouse gas emissions and combat the root causes of climate change.

Recent U.S. Action

For example, in the U.S., the Obama administration has been moving steadily toward a cap-and-trade approach.
 
The recent American Clean Energy and Security Act, along with the Boxer-Kerry Bill, now before the Senate in the U.S., indicates the WCI is playing an influential role in shaping the design of a North American cap-and-trade system.

In fact, even with or without passage of the climate-change legislation now before Congress, the Obama administration is determined to regulate greenhouse-gas emissions and has indicated it would do so through the Environmental Protection Agency.

As the Senate begins debating legislation that would create a national cap-and-trade system, President Obama will be travelling to China and India in pursuit of a global climate deal in December at the international COP15 meeting in Copenhagen.

Protecting Ontario’s interests

Because of these developments in the U.S., Ontario – and Canada – must also move decisively 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 per cent 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.

Road to Copenhagen

The upcoming COP15 conference in Copenhagen will be the test of global cooperation.

There will not be a second chance to undo the environmental and health consequences our children will inherit if we fail to act boldly and decisively.

An accord in Copenhagen would unleash substantial investments into clean-tech and green innovation.  That money will go to the places that are first on the ground with the leading-edge technologies for a lower-carbon world.

As British Prime Minister Gordon Brown stated recently in his support for an international climate change accord: “The economies that embrace the green revolution earliest will reap the greatest rewards.”

Coming out of the previous UN climate change conference in Bali in 2007, faced at the time with the absence of strong leadership from federal governments both here and in the U.S., sub-national governments like Ontario and Quebec and states like California have taken the lead on climate change.
All provinces and territories have been participating in the process established by the federal government in the lead-up to Copenhagen.

We all know that a robust international agreement is the desired outcome of Copenhagen, and that developed countries need to show leadership to help bring developing countries into an agreement.   That is why we in Ontario – and other jurisdictions – have adopted aggressive targets as part of our Climate Change Action Plan.

Ontario is determined to continue 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.

We are committed to doing all we can to ensure Canada adopts the best possible leadership role it can at Copenhagen and exerting 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.

Cap-and-trade is coming — 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 have an enjoyable and productive seminar.

Thank you.

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