Ontario’s new cap and trade legislation is anticipated to become effective starting in the 2017 calendar year, although there is some emerging discussion about a potential delay on some implementation aspects.
While Kingston stands to benefit over the long term by an economy-wide price signal on carbon – which should function to mobilize more innovation and commercialization opportunities for our businesses, institutions, graduates, and entrepreneurs making their mark in the clean tech space, and is expected to provide improved opportunities for our existing businesses which have developed energy reduction and energy management products, services, and technologies – there will no doubt be an immediate financial impact felt on homes and businesses in our region.
Preliminary estimates, based on recent past City of Kingston energy consumption data (natural gas, petroleum, diesel, heating oil, propane, etc.), suggest that the cap and trade program will add in excess of $20MM annually in energy costs, the vast majority of which leaves our local economy. Such estimates are based on known energy consumption patterns in the City of Kingston territory only. Neighbouring small cities and the rural counties will have their own figures, and we can help point decision makers in the right direction in terms of helping determine those figures.
The significance of these figures from a local economic impact perspective increases the importance of understanding the emerging cap and trade regulations and implementation details. We are involved in discussions with other experts provincially, and are working to assist local businesses and municipal officials in understanding the impact in year one and in subsequently years.
At this point it is under discussion if offsets opportunities will be available for certain local businesses and farmers. The agricultural community continues efforts in advocating for Alberta style offsets opportunities. We are familiar with these and how they provided financial opportunities for farmers and ranchers in Alberta.
Businesses, home/building owners and fleet owners will most directly feel the pending cap and trade impact through natural gas price increases and gasoline price increases, as the price on carbon will be implemented through distributors. Certain goods with significant embedded carbon might increase in price. Your best opportunity as a business owner or home owner to prepare and compete in an Ontario market that will soon include a price on carbon, will be to reduce energy use where possible and economical. The law and policy landscape is quickly changing provincially and federally, and energy/water conservation and demand management will become increasingly critical and financially prudent. Many of us are involved in efforts to identify and develop programs and tax/fiscal policies that will help SE Ontario businesses and homeowners reduce energy consumption and invest in this transition.
We are also focused immediately on what cap and trade collected funds from our region will be directly returned or made available for businesses, utilities, and local governments in our region to invest in energy-saving and money-saving conservation and demand management and life-cycle analysis based green building capex investments.
If you wish to attend a future business law presentation on the pending Ontario cap and trade program and how it will impact SE Ontario businesses please contact Lisa Asbreuk at [email protected].