Ontario lobbies to keep emissions credits

Ontario is taking a hard line ahead of a meeting on climate change involving Canada's environment ministers, warning that a national cap-and-trade system to reduce greenhouse gases cannot "discriminate" against the country's most populous province.

Coupled with Quebec's earlier call for Ottawa to raise its targets, the stage may be set for a contentious battle to hammer out a made-in-Canada plan that will put a price on carbon.

Any gains generated in Ontario from a national cap-and-trade system must remain in provincial hands, Premier Dalton McGuinty said in laying out his key demands for the meeting to be held in Ottawa.

"When we have that plan in place, it had better not discriminate against Ontarians who have in fact worked long and hard to reduce our emissions," he said.

"We have made considerable progress in our plan. We don't want that progress to benefit another part of the country, to relieve them of their obligation to make progress as well."

Cap-and-trade regimes place a ceiling on greenhouse gases and let participants buy and sell emissions permits within that cap. Those who don't meet the emissions targets can buy credits from others with a surplus instead of lowering their emissions.

McGuinty didn't single out any regions that may benefit from Ontario's planned emission reductions, such as Alberta's oilsands.

Alberta Premier Ed Stelmach said that his province "is the first and only jurisdiction to put in place a carbon levy."

"I don't want to see a premier imposing a policy across Canada that might put additional huge costs to Albertans," said Stelmach. "It's totally unfair."

"We've watched the federal government support the auto sector," Stelmach added.

But McGuinty said discrimination could occur if Ontario's "hard work" in reducing emissions lets other provinces "off the hook."

"We didn't move forward as Ontarians, we didn't add additional costs to our electricity, to relieve other Canadians of their obligation to make progress in their own way," McGuinty added.

There's "real money" to be found in using less carbon and Ontario should be able to use those funds as it sees fit, he said.

Ontario's carbon credits should also be "ours to trade, not the federal government's to trade away," McGuinty said.

The premier said he received assurances from federal Environment Minister Jim Prentice that a Canadian cap-and-trade regime would be “respectful” of his government's wishes.

Prentice's Ontario counterpart, John Gerretsen, remained tight-lipped on whether the federal, provincial and territorial environment ministers would be able to find common ground at the meeting.

"We'll find out tomorrow," he said.

The meeting, which Prentice promised would happen 10 months ago, will brief the ministers on the Canadian position on climate change ahead of a United Nations summit in Copenhagen next month.

"I don't want to pre-judge anything," Gerretsen added.

It appears the different players will have plenty of time to duke it out over cap-and-trade.

Prentice said Canada will wait to regulate its greenhouse gases until the rest of the world reaches a climate-change deal and the United States decides how it will tackle emissions.

That means Canadian regulations once promised for the beginning of next year could be put off until late 2010, perhaps even longer.

Quebec stepped up its plans to fight climate change with a promise to cut its emissions by at least 20 per cent from 1990 levels by 2020. It had pledged to cut emissions six per cent from 1990 levels by 2012.

The target matches the cut advocated by the Europeans and if Quebec succeeds, it would put the province at the vanguard in North America.

Premier Jean Charest also urged the federal Conservative government to raise its target above the three per cent it has set.

The Conservatives have pledged to cut emissions by 20 per cent from 2006 levels by 2020, a less ambitious goal.

Ontario has committed to reducing emissions by six per cent from 1990 levels by 2014, 15 per cent by 2020 and 80 per cent by 2050.

"Quebec's targets are somewhat more aggressive than that, but you know, their economy is slightly different as well," Gerretsen said.

"They rely an awful lot on hydro power. We, of course, have traditionally had a lot of coal-fired energy power."

Ontario's governing Liberals have pushed back plans to close the coal-fired plants – the province's worst polluters – three times since coming to power in 2003.

That election promise has been complicated further by the government's decision to temporarily shelve plans to build two new nuclear reactors in Darlington, east of Toronto, in order to expand and refurbish its fleet.

At the same time, the Liberals have launched an ambitious plan to attract renewable energy projects to Ontario, such as wind and solar farms, that officials claim will create 50,000 new jobs and help Ontario meet its goal to close its coal-fired plants by 2014.