Ontario will auction off its very first batch of cap-and-trade carbon permits on March 22. The province will be selling off more than 25 million emission allowances for the 2017 “vintage year,” each of which represents one ton of greenhouse gas. That amounts to nearly 18 percent of all 2017 permits. More than 3 million carbon credits for the 2020 vintage year will also be sold during the March event.
The price of a single cap-and-trade credit is expected to be at least $18, which means that the government stands to gain $500 million in potential revenue from the auction. Overall, cap-and-trade will raise nearly $2 billion for the province each year. The proceeds are slated to help fund up to $8.3 billion in climate change programs.
Companies that buy the permits will be able to apply them to their own greenhouse gas emissions, or trade the allowances to other corporations. The cap will shrink by about 4 percent annually, which will reduce the number of allowances, and therefore the amount of emissions generated in the province. The cap-and-trade system is the fulcrum of the government’s plan to reduce carbon emissions to 15 percent below 1990 levels by 2020.
The March 22 auction will occur online, according to the notice. “Bidders submit bids in a single-round, sealed-bid auction format,” it adds.
See the full article in QP Briefing.