• Joins Quebec and California in Western Climate Initiative
  • Large Emitters will get free carbon allowances until 2020

Ontario plans to raise C$1.9 billion ($1.4 billion) a year from its proposed cap-and-trade program starting in 2017 as it joins with Quebec and California to reduce greenhouse gas emissions.

Canada’s most-populous province projects it would generate about C$18 per carbon tonne in the joint market where businesses buy carbon-emission allowances in an auction. Proceeds will be directed toward boosting energy efficiency, public transport, geothermal projects and clean technology, the government said in Thursday’s budget from Toronto. The first auction in March next year would raise about C$478 million.

Ontario is the latest Canadian province to introduce a regime to reduce greenhouse gases, which it’s aiming to cut by 15 percent below 1990 levels by 2020 and 37 percent by 2030. Selling carbon allowances differs from oil-producing Alberta, which plans to increase its carbon tax on emissions to C$20 per tonne in 2017 and to C$30 in 2018, and British Columbia’s C$30 per tonne tax.

“Ontario is investing in the global low-carbon economy,” Finance Minister Charles Sousa said according to the text of his budget speech. “Cap and trade will create an even more dynamic and innovative and business environment.”

Big Emitters

Cap and trade would cover about 82 percent of the province’s greenhouse gas emissions, affecting industries, institutions, electricity generators, and suppliers and distributors of heating and transportation fuels above 25,000 tonnes or 200 liters. The economy-wide cap would decline by about 4.2 percent a year starting in 2017 through the 2020 target.

Industries with high emissions and facing international competition, such cement, lime and steel, would get free allowances until 2020 when the government will review the program.

The program would increase energy costs for households about C$13 a month in 2017, including adding about 4.3 Canadian cents per liter to gasoline and about C$5 per month more to natural gas prices. Residential electricity prices are expected to decline about C$2 per month, the government said.

The Ontario government has already invested C$325 million announced in 2015 in sustainability initiatives.