Officials in Canada and the US are considering cap-and-trade programs for the Midcontinent ISO (MISO), Southwest Power Pool (SPP), and Province of Ontario – with linkages to existing regional cap-and-trade systems potentially creating a true North American carbon market.
While the rationale driving these proposals varies, one central theme stands out: regional carbon markets keep looking like the best option to cut emissions, boost renewables, and protect consumers from the costs of transitioning to a clean energy economy.
Ontario Cap-And-Trade Linking to California-Quebec
Of the three, Ontario’s is the most straightforward and most likely to have a quick impact. The province, which closed down all its coal-fired generation in 2014, is expected to unveil a cap-and-trade program as soon as next week – with support from various political factors.
Ontario’s cap-and-trade would function similarly to neighboring Quebec’s system, setting a limit (the “cap) on emissions from various industries, and auctioning off permits (the “trade”) among polluting entities to cover emissions beyond the cap. System revenue is expected to generate between $1 billion to $2 billion per year, which would then be reinvested into clean energy projects.
The most interesting aspect of Ontario’s cap-and-trade push is an immediate planned linkage to the California-Quebec carbon market, which held its first joint allowance auction in 2014. This new mega-market will cover roughly 60 million people, not to mention more than 60%of Canada’s entire economic output and the largest American state economy.
Ontario’s connection also represents a bit of a coup for regulators in California and Quebec. Late last year, Quebec’s premier floated the idea of linking to Ontario and potentially the Northeast US Regional Greenhouse Gas Initiative, and was initially batted down over integration concerns.
Read more at Carbon Markets Could Soon Cover Half of North America’s Population
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