Emissions trading is a market-based system for reducing industrial greenhouse gas (GHG) emissions. In an emissions trading program, government sets a yearly limit on the amount of greenhouse gases emitted. The limit is based on one-tonne units called “allowances”. Facilities that emit more than the number of allowances they own can buy more allowances from facilities that have surplus allowances. Over time, the emissions limit is lowered, reducing overall emissions.
Ontario recognizes emissions trading as a cost-effective approach to reducing greenhouse gas emissions that provides flexibility for businesses to develop their own compliance strategies while ensuring that, overall, emissions decrease
Ontario is working with other provinces and U.S. states through the Western Climate Initiative (WCI). WCI is a partnership with British Columbia, Manitoba, Quebec, Ontario and California that tackles climate change at a regional level. This work includes designing a broad-based regional emissions trading system.
Ontario has been working since 2009 to develop a program to reduce greenhouse gas emissions from industry that protects the environment and works for the economy. In 2009, the Environmental Protection Act was amended to provide for a greenhouse gas emissions reduction program that could link with other systems.
Also in 2009, Ontario introduced a regulation requiring large emitters to report their greenhouse gas emissions. The Ministry of the Environment has collected data for 2010 and 2011 with the 2011 data verified by a third party. This information is essential for informing the key design elements of a greenhouse gas emissions reduction program.
The Western Climate Initiative (WCI) has released a document that identifies compliance instrument tracking system technical requirements that are common and applicable to WCI jurisdictions.