Ontario, Quebec eye cap-and-trade system

Ontario-Quebec Cap-and-Trade advances as provinces revive a regional carbon market under the Western Climate Initiative, aligning emissions trading, carbon pricing, and climate policy to cap greenhouse gases amid delayed federal action and global climate summits.

Troubles over BP’s massive Gulf of Mexico oil spill have Premier Dalton McGuinty looking to rekindle a cap-and-trade system for carbon emissions as Ontario and Quebec hold their third joint cabinet meeting.

Ontario is one of several provinces and U.S. states that are looking to set up a regional system, despite warnings of higher electricity prices for consumers, but efforts slowed amid the recession and high hopes U.S. President Barack Obama would push for a continental program, a senior Ontario government source said.

But now that Obama’s popularity has been eroded by his health care reforms and he’s preoccupied with the gulf spill and looming mid-term elections, regional politicians are stepping up efforts.

“There’s not a lot of determination on the part of Ottawa, with stalled emission rules in place, these days,” McGuinty said on the front lawn of the Quebec legislature.

“Washington seems to be consumed by other things, perhaps understandably so,” he added, noting the joint meeting will look at “what next step might we take together to demonstrate our continuing resolve to find a way forward.”

Ontario and Quebec have both passed legislation allowing them to set up a cap-and-trade system after a greenhouse gas agreement between them, but only Quebec has regulations in place to move forward. Ontario’s regulations are expected by year’s end.

Charest called the gulf oil spill “a dramatic reminder that the whole issue of the environment and greenhouse gas emissions is there.”

While there had been hopes two years ago of having a cap-and-trade system in place by July 1, 2010, McGuinty, at odds with Dion over a carbon tax in earlier debates, said he now has no idea when it might be ready.

Although other provinces and states in the Western Climate Initiative are starting to “make noise” again, “no one has said what the cap-and-trade system would look like and here’s what the price of carbon would be,” said the senior Ontario source, adding 2013 is seen as the next deadline. The Western Climate initiative is the group seeking a regional system.

In a cap-and-trade system, the governments would set a cap on overall emissions and set limits for the highest polluting industries. Companies producing fewer greenhouse gas emissions than their caps permit could sell their unused emissions credits on the open market to big polluters exceeding their caps.

Climate change has also been added to the agenda at the G20 Summit in Toronto on the last weekend in June after the federal Conservative government, even as Baird dismissed the Ontario-Quebec plan earlier, bowed to pressure from world leaders and environmentalists.

There is a United Nations climate summit in Mexico in December, with countries warning they can’t wait for developed nations to make decisions on next steps.

The joint cabinet meeting comes as Quebec Premier Jean Charest fends off allegations of corruption in his government, now in its third term.

Nine cabinet ministers are here from Ontario, as they discuss ways to push health care reform and environmental issues to more prominence on the national stage, echoing when Stelmach urged provinces to unite behind a climate plan before the annual premiers’ meeting in Winnipeg in August.

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