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: Investing in the Low-Carbon Economy

The global economy is moving towards pricing carbon. The 2016 Budget sets the stage for Ontario to auction carbon allowances in 2017. For that reason, the government is proposing a cap-and-trade program to help Ontario invest in green projects, reward innovative companies and ensure that households and businesses thrive within the transition to a low-carbon economy.

Climate change is already creating direct costs to government, business, people and the economy as a whole.

Ontario is investing in green projects to fight climate change, while driving opportunities for innovation, creating jobs and boosting economic growth. Reducing the carbon footprint goes hand-in-hand with a growing, efficient, competitive and productive economy.

The government’s action plan to fight climate change will include initiatives that help Ontarians in their everyday lives. These initiatives will help mitigate the price increases that are anticipated as a result of cap and trade. They will also provide a range of options for households to go green by supporting energy retrofits, investing in public transit and promoting the adoption of electric vehicles.

Cap-and-trade legislation, if passed, would dedicate all cap-and-trade proceeds towards investing in green projects and ensure public reporting on that commitment.

Ontario’s Green Investments

Ontario is supporting growth in the green economy, helping businesses thrive as they lower their carbon footprint and delivering benefits to Ontario households. The Province has:

  • Eliminated coal-fired electricity plants, the single largest greenhouse gas (GHG) emissions reduction in North America.
  • Raised $750 million with its second issue of Green Bonds in January 2016, which will fund eight environmentally friendly infrastructure projects in communities across Ontario. The issue was made available to retail investors through Canadian financial institutions.
  • Committed $325 million in 2015–16 through the Green Investment Fund to projects that will fight climate change, grow the economy and create jobs. Its investments support energy retrofits in homes, energy-efficiency initiatives and public charging stations for electric vehicles.

Towards a Greener Ontario

Ontario has set ambitious GHG reduction targets for 2020 and 2030. To meet those targets and ensure businesses and households are supported in transitioning to a low-carbon economy, Ontario would:

  • Implement a cap-and-trade program to invest in green projects while fostering competitiveness and innovation. Cap and trade would generate $1.9 billion annually, starting in 2017–18, to fund green initiatives to put Ontario on the path to a prosperous low-carbon economy.
  • By law, all proceeds from auction would go towards funding green projects.
  • Implement carbon pricing that would achieve GHG reductions in ways that ensure Ontario remains an attractive place to do business.
  • Continue investing in clean tech to mobilize private capital and grow the sector to create jobs while establishing ways to make direct investments in exchange for equity — meaning the Province will directly share in firms’ growth.

Cap-and-Trade Green Investments

Ontario’s approach to the investment of cap-and-trade proceeds would be both balanced and strategic, focusing on green investments and sustainable economic growth.

  • Production and use of renewable, low-carbon, carbon-free and net-zero alternative energy
  • Energy management technologies to support load-shifting and energy storage
  • Geothermal solutions, insulation and other technologies to eliminate or reduce GHG emissions from buildings and neighbourhoods
  • Infrastructure to support adoption and use of zero-emission and plug-in hybrid vehicles, and low-carbon alternative fuels
  • Active transportation infrastructure that will eliminate or reduce GHG emissions
  • Support for public transit and transportation infrastructure
  • Initiatives relating to the reduction of GHG emissions from industry
  • Support for practices in agriculture, soil, and forestry and natural systems that reduce emissions
  • Reduction and management of waste that produces GHG emissions
  • Support for organizations that develop and deliver financing tools, project aggregation and professional services for GHG emissions-reduction initiatives

Chart Descriptions

How does Cap and Trade work?

  • Starting in 2017, a province-wide cap on greenhouse gases would be in place. Through 2020, the cap will decline each year.
  • The Province would distribute allowances through auctioning and free-of-charge allocation to industry.
  • Emitters covered under the program must hold an allowance for every tonne of greenhouse gas emissions they release into the air.
  • As the cap declines each year, emitters would need to hold a sufficient number of allowances to cover their annual emissions. To comply, emitters could lower their carbon footprint or purchase allowances in the carbon market.

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Use of Cap-and-Trade Proceeds

  • Proceeds from the auction of emissions allowances are expected to amount to $1.9 billion in 2017.
  • All proceeds will be dedicated to priority green investments such as energy efficiency for homes and businesses, public transit and transportation infrastructure, innovation and clean technology adoption.

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