December 12, 2017 by Ronjoy Bezbarua
(Source: The Climate Trust) Results from Ontario’s November 29th auction highlight a new uncertainty for the Western Climate Initiative and developers of offset projects outside of California. In Ontario’s last independent auction before joining the Western Climate Initiative in 2018, 17% of the current vintage allowances went unsold at auction. Analysts point to the political uncertainty introduced by Ontario’s Progressive Conservative party, which is leading current polls to win the June 2018 general election. This party has promised to end the current cap and trade program by July 2019 and withdraw Ontario from the Western Climate Initiative (Canada will require carbon pricing in all provinces, so the Progressive Conservative’s propose a tax and dividend program instead). Ontario’s cap and trade program is forecasted to be twice as large as Quebec’s and roughly 40% of California’s. Ontario was anticipated to be a net importer of allowances and offsets, and, importantly, The Climate Trust did not anticipate it to follow California’s new reduced offset limits or protectionist preference for in-jurisdiction projects. This meant Ontario was anticipated to be an important source of demand of offsets that are not classified as having direct environmental benefits in California. With Ontario in the Western Climate Initiative, The Climate Trust anticipated existing projects outside California to fulfill only 50% of the demand for “non-California benefit” offsets in the Western Climate Initiative through 2030. If Ontario were to leave the Western Climate Initiative in 2020, existing projects outside of California would fulfill 85% of that reduced demand for “non-California benefit” projects – leaving significantly less room to continue to develop agriculture and forestry greenhouse gas mitigation projects outside of California. Read full article….