Ontario Cap and Trade Auction Results Mark Promising Start to Program

The Ministry of the Environment and Climate Change today announced the results of the province’s first cap-and-trade auction, which was held March 22, 2017. All 25,296,367 current (2017) vintage emission allowances were sold at a settlement price of $18.08, just above the Ontario auction reserve price. Approximately one-quarter of future 2020 vintage emission allowances available sold at the floor price of $18.07. Market participants (i.e., those participants without a compliance obligation) purchased a small proportion of current vintage allowances.

Under Ontario's cap and trade regulation, auctions must be held four times each year during the 2017-2020 compliance period. According to the Ministry, the March 2017 auction generated proceeds of just over $472 million, a figure aligned with expected revenue from the program of $1.9 billion per year. Cap and trade proceeds must be invested in programs or initiatives that reduce greenhouse gas emissions. Ontario's Climate Change Action Plan outlines the province's plan to reduce greenhouse gas emissions by providing people and businesses with tools and incentives to accelerate the use of clean technology. As an initial investment in the Plan, Ontario has already committed $325 million to the Green Investment Fund, which will—among other things—reduce household energy use, support installation of electric vehicle charging stations, and provide Indigenous communities with tools to address climate change.

For further information, please contact Lisa DeMarco at lisa@demarcoallan.com.

Thanks to Jonathan McGillivray for his assistance in preparing this bulletin.

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