Feds reluctantly approve Ontario carbon price for big industrial emitters

OTTAWA — Ontario will be able to use its own carbon-pricing system for big industrial emitters after getting a green light from the federal government over the weekend.

However Environment Minister Jonathan Wilkinson says the nod of approval comes begrudgingly because Ontario's proposal will not cut greenhouse-gas emissions as much as the federal version of a carbon tax.

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In a letter to Ontario Environment Minister Jeff Yurek Sunday, Wilkinson said Ottawa will "stand down" on its federal backstop program for big emitters, but is not happy about it.

"The system that you have designed is significantly weaker than the federal backstop, and it will result in fewer emissions reductions," Wilkinson wrote.

His department has not yet provided the analysis showing the difference between the two programs. The federal government set minimum thresholds for the price that must be applied per tonne of greenhouse gas emissions as well as which sources the price applies to, both of which Ontario's proposal meets.

However Ontario's system phases in the strictness for emissions and is using a credit system the federal government says weakens the overall result because some companies won't have to do much to curb their emissions for quite some time.

Wilkinson asks Yurek to work with Ottawa to beef up Ontario's system.

Yurek said in a statement on Twitter that the province is phasing in the limits but that nobody will get a free pass in a system designed to curb emissions without hurting the economy.

The agreement applies only to emissions produced by companies or organizations that produce more than 50,000 tonnes of greenhouse gases a year, while the federal carbon tax will continue to apply to fuel purchases by individuals and organizations with smaller carbon footprints.

The decision comes on the eve of a Supreme Court of Canada hearing on whether Ottawa overstepped its jurisdiction to impose a carbon price on provinces that don't have comparable systems of their own.

Ottawa's carbon tax on purchased fuels — which is currently set at $30 a tonne — applies now in Alberta, Saskatchewan, Manitoba and Ontario. The program for big emitters axes a portion of actual emissions produced, now will apply in Manitoba, and Prince Edward Island entirely. In Saskatchewan, Ottawa charges its system on electrical generation and natural gas pipelines, two industries that Saskatchewan's provincial carbon price does not affect.

This report by The Canadian Press was first published Sept. 21, 2020.

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