Navigating Ontario's cap-and-trade program

Friday, May 19, 2017

Program participant examines impacts on business

By Jennifer Jackson

Companies and consumers alike are working to determine what the cap-and-trade program means for them, as the government continues to develop its regulations.

The cap-and-trade program, launched January 1, is Ontario's method of reducing greenhouse gas (GHG) emissions. This goal is achieved by capping companies' allowed emissions, according to the province's cap-and-trade website. If companies emit more than their cap, they can either reduce emissions by becoming more efficient or switching to lower carbon fuels, or they can purchase emission allowances in the marketplace.

The government will reduce the cap each year. Government representatives expect this reduced cap will increase the demand for and price of allowances, thus encouraging companies to reduce their emissions.

Companies that emit over 25,000 tonnes of greenhouse gases per year or import electricity, and fuel suppliers that sell more than 200 litres of fuel per year, must participate in the program.

Enbridge Gas Distribution Inc., a natural gas distributor in Ontario, is one of the mandatory participants in the cap-and-trade program. The company is still trying to figure out its place in the market, since the program only officially launched at the beginning of the year, according to Tanya Bruckmueller, external communications, public and government affairs for Enbridge.

"Cap and trade is new to us and our customers. It is also a new market with some uncertainties related to policies," she says. "As a natural gas distributor, the government of Ontario requires us to acquire GHG allowances to cover the emissions for the natural gas consumed by our residential and business customers. The cost of these allowances will be determined in part by the market and passed through to customers based on the amount of natural gas they use. As a result, we've been developing our understanding of the market."

Customers will see cost increases on any product that produces greenhouse gases while processed, including natural gas. The best way for consumers to mitigate extra costs is to try and reduce energy usage, says Bruckmueller.

    Photo credit: mrdoomits/iStock/GettyImagesPlus photo

"Cap and trade covers emissions from sources such as natural gas, gasoline, diesel and propane. Most of our customers will experience cap and trade as an increase on their natural gas bills. We encourage customers to leverage our energy efficiency tips and programs to reduce their costs as well as GHGs," she says.

"Given that cap and trade is a marketplace, some rural customers may also want to watch as the government develops offset protocols as part of the cap-and-trade program because there may be some that could apply to them and their businesses."

Overall, Enbridge hopes the funds generated from the cap-and-trade program will be put to good use.

"We hope that cap-and-trade funds raised by the government (are) used to help advance innovative natural gas solutions that benefit our customers. We have long supported energy efficiency to help our customers reduce emissions and costs," she says.

"Enbridge can play a further role such as delivering renewable natural gas – a proven, carbon-neutral fuel that is created from decomposing organic waste. Renewable natural gas was included in the government's Climate Change Action Plan." BF