The government proposes a "Cap, Credit and Trade" program for the province's electricity sector. Under the plan, total annual emissions of NOx and SO2 from the six coal and oil-fired plants operated by Ontario Power Generation (OPG) will be capped at 36 kilotonnes (kt) and 157.5 kt, respectively. OPG will be able to buy emission reduction credits from non-capped sources to meet these limits. Over time, other power stations, industry sectors and pollutants will be included within the cap.
The difficulty with including zero-emission generators in the trading scheme, the discussion paper argues, is that they create "indirect" emission credits by displacing fossil fuel generation on the grid. There is a danger that such credits would be counted twice, by the renewable energy producer and by the fossil fuel generator whose output, and thus emissions, were reduced.
Ian Baines, president of the Canadian Renewable Energy Corporation, which plans to develop run-of-river hydro, wind and other green power projects in Ontario, calls the government's proposal a lost opportunity.
"The government likes to say, in its public and private discussions, that it believes green power is good and if you open the market it will come. What I'm saying is, here's an opportunity to actually make it come by giving credit to the people who deserve it. Instead, inadvertently, the opposite has happened."
The Independent Power Producers Society of Ontario (IPPSO) has released its own position paper on emissions trading, recommending the government allocate 5-10% of the NOx allowance to renewable technologies, energy efficiency activities and cogeneration projects, a percentage that would increase as the market matures.
The government could also cap all generators, not just OPG, then allocate emissions allowances to all, says IPPSO. "The industries that are dirtier than the provincial average will have to buy additional credits, while those that are cleaner will end up with saleable credits. This places the onus on the polluter and rewards those that are developing and using cleaner technologies."