Cap-trade auction sees scant interest

A joint cap-and-trade auction in Quebec and California has yielded less-than-stellar results, just three weeks ahead of Ontario’s first auction and a year before the province plans to link its own system with that market.

Ontario is set to hold an auction on March 22 in its new cap-andtrade system, which limits how much pollution companies can emit.

Businesses covered under capand-trade will buy permits or allowances through quarterly government-run auctions or from other companies that come in under their limits.

The latest joint auction in Quebec and California, a market Ontario plans to join next year, saw just 18 per cent of the allowances sold in results released Wednesday.

Their previous auction saw a promising upswing with 88 per cent of the available credits sold, after results before that of 35 per cent and 11 per cent.

Ontario hopes to raise $1.9 billion a year from its cap-and-trade system — $8 billion by the end of 2020 — and promises to spend all of it on programs that reduce emissions and help businesses and consumers adapt to a low-carbon economy.

Most large emitters will receive allowances for free until 2020, which the government says is meant to prevent them from moving to jurisdictions without carbon pricing.

Though the first auction isn’t until later this month, cap and trade has already increased the cost of gasoline by about 4.3 cents per litre and boosted the cost of natural gas home heating by up to $6.70 a month.

Auditor general Bonnie Lysyk has said households will also pay another $75 per year by 2019 in indirect costs on goods and services.

Both Lysyk and the environmental commissioner have said that Ontario’s cap-and-trade program won’t actually limit greenhouse gas emissions through to 2020 because it will often be cheaper for Ontario polluters to purchase California allowances.

Ontario businesses will pay approximately $466 million for Quebec and California allowances by the end of 2020, Lysyk predicted.

Environment Minister Glen Murray has said there will be give and take between jurisdictions in the eventually linked market, saying sometimes Ontario will be a net seller of allowances and sometimes Ontario will buy more of its reductions.