2015 Ontario Economic Outlook and Fiscal Review
Chapter I: Building Ontario Up — Progress for Prosperity

Section G: Tackling Climate Change

Good environmental policy is good economic policy. The government is committed to tackling climate change through proven initiatives to meet its environmental goals, while continuing to foster a competitive business climate and grow the economy. By acting now, Ontario continues to demonstrate global leadership. Ontario is the first Canadian jurisdiction to establish a mid-term greenhouse gas emissions reduction target for 2030. The government is proposing a down payment through a Green Investment Fund that will be targeted at reducing GHG emissions while strengthening the economy.

Climate change is one of the most urgent issues of this generation. Ontario requires strong collective action to reduce harmful greenhouse gas (GHG) emissions, which are harming the climate, threatening communities and putting future prosperity at risk.

The Province has already demonstrated leadership in response to this challenge. In 2007, Ontario established concrete targets for reducing emissions below 1990 levels by six per cent by 2014, 15 per cent by 2020 and 80 per cent by 2050. It has also taken significant steps against climate change, such as eliminating coal-fired electricity generation in 2014, which represents the single largest climate change initiative in North America, helping Ontario meet its 2014 emissions reduction target.

The successful closure of coal-fired power plants has been Ontario’s landmark achievement in reducing GHG emissions. However, the reduction of future emissions, while preparing Ontario communities to adapt to changes that are already underway, requires continuous effort. The Province is playing an active role in international cooperation on emissions reduction and is working with stakeholders, First Nations and other Ontarians as it develops a cap-and-trade program to support environmentally and economically sustainable growth over the long term.

In addition, addressing climate change now will allow Ontario to take advantage of the enormous economic opportunities that have emerged for clean technologies. Ontario is a leader in the environmental and clean technology sectors including areas such as power generation, transportation, energy efficiency, recycling, and water and wastewater solutions. For the second consecutive year, the province is the leading jurisdiction in North America for green investment.

Clean Technology Companies in Ontario

Ontario is home to over one-third of Canadian companies that are developing innovative clean technologies, providing power generation, transportation, energy efficiency, recycling, and water and wastewater solutions. By 2020, Canadian clean technology companies are expected to account for 100,000 direct jobs and generate 80 per cent of their revenues from global exports. Research and development investments by these companies are rising strongly, well above economy-wide performance.

 Analytica Advisors, “2015 Canadian Clean Technology Industry Report.”

2015 Budget: Building Ontario Up

The 2015 Budget reiterated Ontario’s commitment to implement a cap-and-trade program, along with a range of complementary GHG emissions reduction initiatives. Together, these will help Ontario achieve its emissions reduction targets while rewarding innovative companies, providing greater certainty for industries and creating more opportunities for investment in the province. As a member of the Western Climate Initiative, Ontario intends to link its cap-and-trade program with those in Quebec and California.

Progress since the 2015 Budget

Since the 2015 Budget, the government has been consulting extensively with industry, experts, environmental groups, First Nations and other Ontarians. These in-depth consultations have played a vital role in informing the design of a cap-and-trade program and climate action plan tailored for Ontario’s unique circumstances.

In May, Ontario became the first Canadian province to set a mid-term GHG emissions reduction target for 2030. This is in addition to the Province’s GHG emissions reduction goals for 2020 and 2050. The commitment to a new mid-term target to reduce emissions by 37 per cent below 1990 levels by 2030 will enable Ontario to achieve its long-term environmental goals.

Ontario continues to show global leadership in taking action against climate change. In July, the Province hosted the Climate Summit of the Americas. The summit culminated in the Climate Action Statement, the first-ever Pan-American action statement on climate change, which was signed by Ontario and 22 other states and regions including Brazil, Mexico and the United States. The Climate Action Statement highlights the jurisdictions’ commitment to work together to achieve environmental goals.

Going Forward

The Province has released a broad climate change strategy and is developing a specific action plan for achieving its 2020 emissions reduction target. The climate change strategy will set Ontario’s path towards a low-carbon, competitive and sustainable economy. The action plan, to be reviewed every five years, will identify specific projects and initiatives necessary to achieve the Province’s targets.

In the 2015 Budget, the government committed to ensuring that all proceeds from a cap-and-trade program would be dedicated to actions that reduce GHG emissions and build the foundation of new sustainable prosperity for the province’s households and businesses.

As an immediate first step, the government proposes a down payment of $325 million in 2015–16 through a Green Investment Fund that will be targeted at reducing GHG emissions while strengthening the economy. Through this initial investment, the Fund will support energy retrofits in homes (including affordable housing), energy-efficiency investments in small and medium-sized enterprises and industry, support for Aboriginal communities, and new investments in electric vehicle infrastructure. Further details regarding the fund and options for future investments will be provided in the 2016 Budget.

Chart 1.3: Ontario Greenhouse Gas Emissions and Targets

This line chart shows Ontario’s greenhouse gas emissions between 1990 and 2013, with the Province’s emissions reduction targets for 2014, 2020 and 2030. The province’s emissions declined primarily due to the completed phase-out of coal-fired electricity, and other policy initiatives, as well as the recession, enabling Ontario to reach the 2014 target. Emissions will need to decrease further between 2014 and 2030 to achieve the 2020 and 2030 targets.

Return to Chart 1.3