Blog Post

Ontario Announces Plans for Spending Cap and Trade Proceeds

Recently, the Ontario Minister of Environment and Climate Change announced the creation of a $100 million Municipal GHG Challenge Fund. The new fund is intended to fund greenhouse gas (GHG) emissions reduction projects in Ontario communities. Examples of the type of projects that might receive funding are renewable energy and energy efficiency retrofits to municipal facilities like arenas, and energy-efficiency upgrades to drinking water or wastewater treatment plants. The goal is to achieve long-term and cost-effective pollution reductions.

In order to be eligible for the Municipal GHG Challenge Fund, a municipality must have “a community-wide greenhouse gas inventory, emissions reduction targets and a strategy/plan to reduce emissions.” Those municipalities who have a “comprehensive GHG reduction plan” that meets or exceeds Ontario’s 2020, 2030 and 2050 emissions targets will be more likely to receive funding. Further details are set out in the Municipal GHG Challenge Fund Program Guide. Applications are due by November 14, 2017.

The money to support the Municipal GHG Challenge Fund will come from the proceeds of the Ontario Government’s Cap and Trade auctions to sell GHG Allowances. As explained in the most recent “Post-Auction Proceeds Report” issued in June 2017, the total Ontario auction proceeds received to date are around $975 million. That total (which represents the proceeds from the first two auctions) will increase with each subsequent auction. Assuming that the final two auctions to be held in 2017 are as successful as the first two auctions (see here and here), then the total proceeds for this year could approach $2 billion.

The announcement of the Municipal GHG Challenge Fund follows a couple of other similar announcements made in May and June. At that time, Premier Wynne committed to allocate $200 million of Cap and Trade proceeds for schools across the province to install energy-efficient building improvements like new windows, lights and furnaces. The Minister of Transportation also announced the investment of $50 million to fund initiatives that support commuter cycling infrastructure. Previously, the Government had announced a commitment of $325 million to a “Green Investment Fund” for “projects that will fight climate change, grow the economy and create jobs.” The list of projects receiving support from the Green Investment Fund is set out on its webpage

Taken together, the Cap and Trade funding announced to date appears to be less than the expected Cap and Trade proceeds for 2017. It seems fair to expect that we will see more announcements about climate change projects funded from Cap and Trade proceeds in the coming months.