Ontario Moving in the Right Direction on Climate Policy: IISD input on climate policy design to the Ministry of the Environment

The document argues that Ontario should implement a unified carbon-pricing scheme, specifically a cap-and-trade system, to preempt federal sector-by-sector regulations and ensure cost-effective mitigation. Using economic modelling, the authors suggest that full compliance flexibility—including offsets and potential linking with the Western Climate Initiative (WCI)—could reduce compliance costs to below $15 per tonne by 2020. The brief cautions against overcompensating firms through free permit allocations, particularly in the electricity sector, to avoid windfall profits, and suggests a 25,000 tonne coverage threshold to align with California and Quebec systems.

• A unified carbon-pricing scheme is recommended for Ontario's industrial sectors to avoid the risks associated with federal sector-by-sector GHG policies and to facilitate federal equivalency agreements.
• Modelling indicates that a cap-and-trade system with full compliance flexibility could result in compliance costs under $15 per tonne in 2020 and emission reductions of approximately 3 megatonnes (7% below forecast 2020 industrial emissions).
• Compliance flexibility is critical for cost-effectiveness; an inflexible sector-by-sector regulatory approach to meet the 5% reduction target could lead to average compliance costs of around $80 per tonne.
• The inclusion of Ontario-based offsets or linking with the Western Climate Initiative (WCI) would significantly lower costs, with permit prices potentially dropping to the range of $11 in a scenario with offsets.
• The authors advise against providing free permit allocations to the electricity sector to prevent the passing of costs to customers and the creation of windfall gains.
• To prepare for future linking with the carbon markets of California and Quebec, Ontario should adopt a coverage threshold of 25,000 tonnes.

APA

Sawyer, D., & Gass, P. (2013). Ontario Moving in the Right Direction on Climate Policy: IISD input on climate policy design to the Ministry of the Environment. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/ontario_climate_policy.pdf

Chicago

Sawyer, Dave, and Philip Gass. Ontario Moving in the Right Direction on Climate Policy: IISD input on climate policy design to the Ministry of the Environment. International Institute for Sustainable Development, 2013. https://www.iisd.org/system/files/publications/ontario_climate_policy.pdf.

Wikipedia

{{cite report |last1=Sawyer |first1=Dave |last2=Gass |first2=Philip |title=Ontario Moving in the Right Direction on Climate Policy: IISD input on climate policy design to the Ministry of the Environment |publisher=International Institute for Sustainable Development |date=April 2013 |url=https://www.iisd.org/system/files/publications/ontario_climate_policy.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sawyer2013ontario, author = {Sawyer, Dave and Gass, Philip}, title = {{Ontario Moving in the Right Direction on Climate Policy: IISD input on climate policy design to the Ministry of the Environment}}, institution = {International Institute for Sustainable Development}, year = {2013}, month = apr, url = {https://www.iisd.org/system/files/publications/ontario_climate_policy.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }