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Ontario Posts Final Cap and Trade Regulation

Archived News Release

Ontario Posts Final Cap and Trade Regulation

Province Reducing Greenhouse Gas Pollution, Creating Jobs

Ontario has finalized the rules for its new cap and trade program to limit greenhouse gas pollution, reward innovative companies, generate opportunities for investment in Ontario and create jobs while moving to a low-carbon economy.

The cap and trade regulation takes effect July 1, 2016 and includes detailed requirements for businesses participating in the program, including:

  • Greenhouse gas emission caps
  • Entities covered by the program
  • Compliance
  • Auction and sale of allowances
  • Distribution of allowances

A cap and trade program is a proven way to reduce greenhouse gas emissions and fight climate change by giving polluters an incentive to cut emissions. It creates a price on carbon emissions by limiting the amount of greenhouse gas pollution that can come from the economy (the cap) and then allowing those covered by the cap to trade among themselves (the trade) in a flexible and cost-effective way.

The final regulation reflects feedback from extensive consultations with industry, the public, environmental organizations and others. The province also engaged Indigenous communities about the regulation, and has committed to continuing these discussions.

Climate change is not a distant threat - it is already costing the people of Ontario. It has damaged our environment, caused extreme weather like floods and droughts, and hurt our ability to grow food in some regions. Over the near term, climate change will increase the cost of food and insurance rates, harm wildlife and nature, and eventually make the world inhospitable for our children and grandchildren.

Fighting climate change is part of the government's economic plan to build Ontario up and deliver on its number-one priority to grow the economy and create jobs. The four-part plan includes investing in people's talents and skills, including helping more people get and create the jobs of the future by expanding access to high-quality college and university education. The plan is making the largest investment in public infrastructure in Ontario's history and investing in a low-carbon economy driven by innovative, high-growth, export-oriented businesses. The plan is also helping working Ontarians achieve a more secure retirement.

Quick Facts

  • On May 18, 2016, Ontario passed landmark climate change legislation that ensures the province is accountable for responsibly and transparently investing proceeds from the cap and trade program into actions that reduce greenhouse gas pollution, create jobs and help people and businesses shift to a low-carbon economy.
  • Based on estimates, Ontario expects to generate approximately $1.8-1.9 billion per year in proceeds from its cap and trade program to invest in programs that reduce greenhouse gas pollution, help save families money and reward innovative companies by creating more opportunities for investment in Ontario.
  • Additional rules for offsets, early reduction credits and administrative monetary penalties will be posted later this year.
  • The Greenhouse Gas Reduction Account will receive proceeds from auctioning allowances under Ontario’s cap and trade program. The first auction is targeted for March 2017.
  • The province engaged an external expert, EnviroEconomics, to conduct economic modelling and analysis on potential impacts of the province’s proposed cap and trade program.
  • Ontario intends to link its cap and trade program with Québec and California.
  • Ontario’s Climate Change Action Plan is the next step in Ontario’s ongoing fight against climate change and is expected to be released in spring 2016. The plan will describe actions that will help more Ontario households and businesses to adopt low- and no-carbon energy in homes, vehicles and workplaces.
  • Ontario’s $325-million Green Investment Fund, a down payment on the province’s cap and trade program, is already strengthening the economy, creating good jobs and driving innovation while fighting climate change — a strong signal of what Ontarians can expect from proceeds of the province’s cap and trade program. These investments will help secure a healthy, clean and prosperous low-carbon future and transform the way we live, move and work while ensuring strong, sustainable communities.

Additional Resources


“Climate change is one of the biggest threats facing humanity today. Ontario is doing its part to reduce harmful greenhouse gas pollution by putting in place a cap and trade program to limit emissions and invest in the kind of innovative solutions that will give our kids and grandkids the sustainable and prosperous legacy they deserve.”

Glen Murray

Minister of the Environment and Climate Change

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Environment and Energy