PCs will end Ontario cap-and-trade program, Ford vows

Ontario’s premier-designate Doug Ford is moving quickly to kill the province’s cap-and-trade program while preparing to battle Prime Minister Justin Trudeau over carbon taxes and climate change.

Once sworn in, the new Progressive Conservative government will immediately issue the required one-year notice for withdrawing from the carbon-allowance trading system in which it participates with Quebec and California, Mr. Ford said at a news conference on Friday.

His government will then work on legislation to dismantle the climate-change plan put in place by the outgoing Liberal government that imposes an indirect levy on carbon dioxide emissions from the burning of gasoline, diesel and natural gas.

Related: Doug Ford has won Ontario’s election. What happens now? A guide

However, the premier-designate gave no indication as to how he would regulate greenhouse gas emissions, if at all, or how he would deal with companies who have purchased about $2.8-billion in credits to comply with the existing regulations.

“In Ontario, the carbon tax’s days are numbered ... they’re gone, they’re done,” Mr. Ford said, speaking at the legislature on Friday morning.

The incoming premier is poised to join a growing national fight over carbon taxes and climate-change policy being waged between conservative politicians, Liberals and New Democrats, at both the federal and provincial levels.

Backed by Alberta’s United Conservative Party leader Jason Kenney, Saskatchewan Premier Scott Moe is pursuing a court challenge against the federal plan to impose a carbon tax in provinces that don’t have their own levy, whether direct tax or cap-and-trade system.

“I will be directing my attorney general to use all available resources, to use every power at the government’s disposal,” Mr. Ford said. “We will officially challenge the federal government’s carbon tax on Ontario families, because the cap-and-trade carbon tax does nothing for the environment, all it does is hurt small businesses and hurt families,” he said.

Alberta has an election scheduled for next spring, and Premier Rachel Notley – an important ally for Mr. Trudeau on climate – is trailing Mr. Kenney in the polls. With a federal election due in October, 2019, the Prime Minister faces a concerted conservative attack on his planned carbon tax.

Environment Minister Catherine McKenna indicated that Ottawa would likely impose a carbon tax on Ontario if Mr. Ford proceeds with his plan to end cap-and-trade. Facing tough political opposition over the tax, the Trudeau government would likely then rebate the revenues raised in the province back to households and businesses.

The federal tax is scheduled to come in on Jan. 1 at $20 per tonne and rise to $50 per tonne in 2022. The minimum price for allowances in Ontario is forecast to be less than $25 per tonne, which gets passed on to consumers.

Climate change is real and its impacts do not stop with a change in government, Ms. McKenna said in a statement.

She said Mr. Ford’s announcement indicates that he is effectively withdrawing from the federal-provincial-territorial agreement to combat climate change that was signed in December, 2016.

“With that in mind, our government is considering all the options included in federal legislation passed [Thursday]. One of those options is a federal price on carbon pollution that is returned to citizens in the province where the revenue is collected.”

Ontario’s New Democrats, who will be forming the province’s official opposition once Mr. Ford takes office, described Friday’s move by the premier-designate as part of an “anti-environment crusade” and warned the costs of exiting cap-and-trade could be prohibitive.

“Scrapping all clean-air and climate change initiatives will hurt Ontario – and doing that without any sort of a replacement carbon reduction initiative is completely irresponsible,” Toronto-area MPP Peter Tabuns said in a statement.

The Ontario cap-and-trade program applies to all distributors of gasoline and natural gas, as well as large industrial emitters of carbon dioxide. It currently adds about 4.3 cents to a litre of gasoline. Mr. Ford said its elimination will be one step in his promise to cut gasoline taxes by 10 cents a litre.

The Ontario program is one of several provincial carbon pricing systems that underpin the Canadian commitment to cut greenhouse gas emissions by 30 per cent from 2005 levels by 2030.

It establishes individual caps for energy distributors and large industrial firms for their greenhouse gas emissions, and a market for trading emission permits, also known as allowances.

By law, the revenues must be used for programs to reduce greenhouse gas emission, such as subsidies for electric vehicle purchases, rebates for homeowners to improve energy efficiency and support for municipalities and small businesses to reduce their energy use.

The next Western Climate Initiative auction is scheduled for August. However, Ontario indicated on Friday that it will not participate.

Some of Canada’s largest corporations have participated in the allowance auctions – including Suncor Energy Inc., Imperial Oil Ltd., Enbridge Inc., Ontario Power Generation and Royal Bank of Canada – and now face an uncertain climate-change landscape.

“We look forward to working with the Ontario government to help develop a framework that achieves what’s needed for the climate, provides regulatory and investment certainty, and considers the impact for people and businesses,” Suncor’s Sneh Seetal said.