Ontario’s Cap and Trade Program: The Inaugural Year, Perplexed Participants, and an Iffy Future
Jennifer Packer Tej Gidda March 7, 2018
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Presentation Overview 1. 2. 3.
Market Re”cap” and update on Cap and Trade Allowances and Auction Revenues Offset Protocols and Regulation
Carbon market overview Offset projects Sale of offsets
LFG
Sale of government allowances
A/D
Purchase offsets and/or allowances Sale of allowances
Reduction obligation
GHG emissions cap
Total GHG emissions
Allowances
Total GHG emissions
Reporting threshold
Regulated emitter A
Regulated emitter B
Update on Cap and Trade - Ontario auctions occur four times a year, the first auction was held in March 2017 - Joined Quebec and California January 1, 2018 - Proposed Amendments to Cap and Trade Program and Reporting Regulations (September 22) - Established Offset Regulation and Landfill Initiative Protocol
Update on Cap and Trade Auction Results – March 2017
https://www.ontario.ca/page/past-auction-information-and-results
Update on Cap and Trade Auction Results – June 2017
https://www.ontario.ca/page/past-auction-information-and-results
Update on Cap and Trade Auction Results – September 2017
https://www.ontario.ca/page/past-auction-information-and-results
Update on Cap and Trade Auction Results – November 2017
Joining California and Quebec - Ontario’s cap and trade program now linked with California and Quebec - First joint auction February 21, 2018 - 2018 Annual Auction Reserve Price: $14.68 (CAD) - In 2024 the WCI market is forecasted to move to a ‘short market’ resulting in a shortage of allowances available Price forecasting projects a steady rate of increase in the minimum long term carbon price (auction reserve price)1. 2018: $17 2023: $21 2028: $27 1. Long-Term Carbon Price Forecast Report. May 31, 2017. Updated July 19, 2017. Submitted to the Ontario Energy Board by ICF Consulting Canada. https://www.oeb.ca/sites/default/files/uploads/OEB-LTCPF-Report-20170531.pdf
Proposed Amendments to Cap and Trade Program and Reporting Regulations -
Regulatory amendments to link with California and Quebec -
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Allowances and credits from all jurisdictions will be mutually interchangeable.
Additional amendments include: -
Establishment of emission caps for the years 2021 to 2030. Administrative amendments to improve data reliability and program efficiency.
Offset Credits Offset Credit Regulation (O.Reg. 539/17): - Start date of an offset project January 1, 2007 or later -
When emission reductions first occur
- Application for initial registration of the offset initiative must be made within 18 months of the start-date or offset protocol approval, whichever is later
- As long as a project keeps creating emission reductions (offsets), it can claim credits for up to 30 years. - ‘Sponsors’ (project proponents) can be located anywhere in Canada, other than Quebec. Also a voluntary offset program under development..
Offset Protocols - Landfill Initiative Protocol for Landfill Methane Destruction - Ozone Depleting Substances Offset Protocol (DRAFT) - Mine Methane Capture Offset Protocol (DRAFT) - Afforestation and Reforestation - Anaerobic Digestion (Organic Waste and Manure) - Conservation Cropping - Emission Reductions from Livestock (Enteric) - Forest (avoided conversion and improved forest management) - Grassland - N2O Reductions from Fertilizer Management - Organic Waste Management - Refrigeration Systems - Urban Forest
Landfill Gas Capture and Destruction Protocol –
100 cfm LFG destroyed = 10,000 tCO2e
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Closed Landfills •
Opened or expanded between August 1998 and 2005 maximum capacity < 3 million cubic metres.
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Opened or was expanded between 2006 and 2008 received less than 50,000 tonnes of waste annually and maximum capacity < 1.5 million cubic metres.
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2009 or later < 50,000 tonnes of waste annually and had a maximum capacity < 1.5 million cubic metres; AND
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On the date of registration with the Ministry < 450,000 tonnes of waste in place
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Operational Landfills: •
Receive < 50,000 tonnes of waste annually,
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Total capacity <1.5 million cubic metres, AND
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< 450,000 tonnes of waste in place
Outside Ontario Where a legal requirement applies to a landfill that imposes a lower amount in respect to eligibility criterion the protocol the lower amount must be used.
Specific Class Landfills Open or closed landfill sites of pulp and paper mills, sawmills, or oriented strandboard manufacturing facilities do not have to meet the eligibility requirements for tonnages and volumes.
Ontario Climate Change Action Plan -
$1.8 to $1.9 bn/year for Greenhouse Gas Reductions - Action areas: - Transportation - Buildings and homes -
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Land-use planning -
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Support RNG development Municipal GHG Challenge Fund
Industry and business Indigenous communities Research and development Government Agriculture, forests and lands -
Reduce organics to landfill
Revenues Green Investment Fund ($325 million) - Home energy conservation incentives - Support electric vehicles - Retrofit social housing - Help businesses reduce emissions -
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Ontario Centres of Excellence (OCE) Target GHG Program $74M for ‘cleantech projects’
Fund local environmental organizations Support Indigenous communities
Municipal GHG Challenge Fund - $100M in funding to support municipal GHG emission reduction projects (up to $10M / project)
Summary - Lots of cash flow in first year and one established protocol - Participants still figuring the market out - Continued growth and development in the program’s future
Jenn Packer
Tej Gidda
[email protected]
[email protected]
