The newly elected Ontario government announced on Tuesday it would end the province’s cap-and-trade program, a policy designed to reduce greenhouse gas emissions, fulfilling one of Premier Doug Ford’s election promises.
However, according to Reuters, it leaves businesses that bought $2.8 billion worth of allowances in limbo.
The government said it would immediately start an orderly wind-down of all programs funded out of cap-and-trade carbon tax revenues but agreed to honor certain contracts that have already been signed.
Citing the auditor general, the government said the program could cost Ontario consumers and businesses $8 billion, with a minimal impact on the province’s carbon emissions.
Michael Berends, managing director at Toronto-based cap-and-trade advisers ClearBlue Markets, told Reuters the pace of the government’s move leaves many unanswered questions.
Berends believes the Ontario government’s decision is also going to impact companies that are planning on using their allowances for their obligations toward Quebec and California before the Nov. 1 deadline.
Earlier this year, the U.S. state of California and two Canadian provinces – Ontario and Quebec – kicked off a cross-border auction of greenhouse gas emission credits to buy and sell in the cap and trade market in an effort to fight global warming.