(Corrects to show electricity generation and fuel distribution
facilities not eligible for free allowances, paragraph 12)
By Alastair Sharp
TORONTO, Sept 29 Bargain-basement prices for
carbon emissions in the cap-and-trade market shared by
California and Quebec are unlikely to get much of a lift from
Ontario's pending inclusion in the plan, policymakers for the
three jurisdictions said on Thursday.
California posted disappointing results last month from an
auction of carbon permits under the plan - permission notes to
emit heat-trapping greenhouse gases against a slowing shrinking
quota. Critics have said the program suffers from a glut of
The province of Ontario, Canada's industrial powerhouse,
will run its first auction of carbon permits next March and
expects to be fully incorporated in the scheme 12 months from
"We think adding in Ontario will ... reinvigorate the market
to a certain extent," said Matt Rodriquez, California's
secretary for environmental protection.
"There will be new buyers out there, but we don't expect to
see a tremendous change in where the prices are currently."
Quebec Environment Minister David Heurtel, commenting on low
market prices, said: "A market is always going to have ups and
downs, it's cyclical."
Rodriquez said he expected the two Canadian provinces to
follow California's lead in removing credits unsold at auction
until there is clear evidence of excess demand, which he said
set the largest North American carbon market apart from its
European Union counterpart.
Ontario Environment Minister Glen Murray said the province
would likely need to run two to four auctions before it could
officially join the market.
Ontario expects to raise C$478 million ($364 million) from
its auctions in fiscal 2016-17, rising to C$1.8 billion to C$1.9
billion a year from 2017-18.
But Murray said collecting revenue - which will be directed
into other green government plans - was not the main aim of the
"Our goal isn't to get the highest price," Murray said. "Our
goal is to get the most affordable and successful transition to
a low carbon economy."
Ontario's Liberal government says it is taking steps to
prevent companies, including 75 percent of Canada's heavy
industry, from leaving the province for less onerous
jurisdictions. It is giving away for free some or all of the
allowances large emitters, excluding electricity generation and
fuel distribution facilities, will need until 2020.
Ontario's inclusion will expand the cap-and-trade market by
about 30 percent, or 140 million tonnes of emissions in 2017.
Quebec will contribute just over 60 million next year, with
about 400 million from California.
($1 = 1.3147 Canadian dollars)
(Editing by Peter Cooney)