Ontario begins cap-and-trade Jan. 1

From the moment Stone Age man discovered more than 500,000 years ago that a fire could be lit and controlled, carbon has been the engine of civilization.

Carbon is nature’s basic building block, found in every living thing, plant or animal. Over time nature recomposed a lot of that carbon into fossil fuels: coal, natural gas and crude oil. Pulled out of the ground, they fuelled a carbon-dependent, energy-consuming society.

Which means that putting the brakes on the amount of carbon we burn is a big, complex project.

Ontario has adopted a five-year plan to cut reduce carbon consumption, the Climate Change Action Plan. Peterborough has its own plan, one that covers both the city and county.

This coming Jan. 1 anyone who hasn’t been paying attention to what’s been going on in the world of carbon control will wake up to the new reality of “cap and trade.”

For most of us the result will be deceptively simple. Gasoline will cost an extra 4.3 cents a litre. You’ll see the evidence on the signs at every gas station you pass.

Heat your home with natural gas, or the water you shower in? Cook with it? You’ll pay 3.3 cents more for every cubic metre you burn. With a current price of about 11 cents a cubic metre that’s a 30-per-cent increase.

Diesel fuel will go up 5 cents a litre, propane 4 cents a cubic metre.

The effect on electricity prices won’t be nearly as drastic. Nuclear plants, hydro dams and alternative energy sources produce almost all of Ontario’s electricity these days. Coal is done and natural gas plants are on their way out.

How much those price increases cost individual consumers will vary, but it’s not hard to come up with some average figures. Natural Resources Canada says that a new, average-sized Canadian home burns about 2,700 cubic metres a year for heating. That translates to an additional $89 a year at 3.3 cents a cubic metre.

If your car use 10 litres of fuel per 100 kilometres and you drive 30,000 kilometres a year your annual cap-and-trade premium will be $115.

While those price hikes are what most of us will experience directly, they are a small part of the overall cap-and-trade mechanism.

Cap-and-trade is one of several ways governments can attempt to force down the use of fossil fuels, and therefore reduce the future impacts of climate change.

The “cap” is a ceiling set on carbon emissions. Ontario has set its 2017 cap at the equivalent of 142.3 million tonnes of CO2 , commonly referred to as greenhouse gases (GHG), released into the atmosphere. Ever industry and businesses that emits GHG gets an individual cap number. Those that release more carbon than their cap allows can buy carbon allowances; those that release less than their cap can sell allowances or bank them.

Each year for the next five years time the cap will be lowered, increasing pressure on everyone to get under their cap and save money.

For 2017 the mandatory cap will apply only to very large industries and institutions that release 25,000 or more tonnes of CO2 annually, a total of 140 province-wide. Industries and institutions that produce less than 25,000 tonnes of GHG can voluntarily register for the cap-and-trade program.

Cap-and-trade also applies to companies that sell energy, including natural gas suppliers Enbridge and Consumers Gas and gasoline distributers. That is where the price increases that affect individuals come in. The province has mandated those increases in an attempt to cut consumption.

In Ontario, cap-and-trade is expected to generate $2 billion a year by 2020. The province intends to put all that money into environmental measures and incentive programs to cut GHG emissions: investment in public transit, bigger grants to offset the cost of buying electric cars, retrofit programs for homes would be among them.

A future article will look at how those programs will work, and how consumers can take advantage of them.

This is one of a series of articles commissioned and paid for by Sustainable Peterborough and published in partnership with The Peterborough Examiner. By Jim Hendry, Peterborough Examiner, original article published Saturday, December 10, 2016.