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Ontario passes bill to create cap-and-trade system

Jeff Leal is pictured on Feb. 11, 2013. Leal says the Liberals are "not forcing anyone off of natural gas."

Peter Power/Peter Power/The Globe and Mail

Ontario has passed legislation creating a cap-and-trade system to fight climate change, which is expected to add $5 a month to home heating bills and about 4.3 cents to the price of a litre of gasoline.

Under cap and trade, industries are given specific pollution limits, but can sell their emission allowances to other companies if they come in below their annual limit, or buy credits if they exceed it.

The province plans to hold its first auction of pollution credits in early 2017, and expects to raise $1.9-billion a year from the plan, promising to use the money to help people and companies transition to a low carbon economy.

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The Chamber of Commerce this week urged the Liberals to delay implementation of cap and trade for one year, saying key questions remain unanswered.

Chamber CEO Allan O'Dette says businesses are still seeking details on how revenue generated by cap and trade will be invested and administered.

The Progressive Conservatives support the idea of putting a price on carbon to reduce greenhouse gas emissions, but say it should be neutral, and claim the Liberals will use the money generated by cap and trade to balance the books.

Ontario will join existing cap-and-trade markets in Quebec and California starting next January. Manitoba has also signed on to join in the cap-and-trade plan with Ontario and Quebec, but will limit it to 20 large polluters in the province.

The carbon pricing scheme is a key part of the Liberal's climate strategy, but their climate change action plan won't be officially released for a couple of weeks.

Emission allowances will be capped at roughly 142 metric tonnes per year in 2017, which is expected to decline 4.17 per cent each year to 2020, when the Liberals hope to have achieved a 15-per-cent reduction in greenhouse gas emissions over 1990 levels.

But some major Ontario industries will be given a four-year exemption from cap-and-trade, which the government says is necessary to protect Ontario jobs in sectors that compete with jurisdictions without a carbon pricing system.

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The Liberals deny a published report claiming their climate change plan would include phasing out the use of natural gas for home heating, and point out they are expanding the gas grid to more rural areas of the province.

"Despite what the opposition are saying, we're not forcing anyone off of natural gas," Agriculture Minister Jeff Leal told the legislature Wednesday.

"There will not be climate change police in the province of Ontario seizing natural gas furnaces or fireplaces."

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