To meet these limits, emitters will be able to buy reduction credits not only from within Ontario, but from jurisdictions that have a direct impact on the province's air quality, including 12 US states and the District of Columbia. "Emissions trading is supported around the world as a proven incentive to reduce emissions," says Elizabeth Witmer, Ontario's environment minister. "Ontario's new emissions reduction trading system will prepare us for trading in other industrial sectors, as well as for trading that may come out of the Kyoto Protocol."
In announcing the new regulation, Witmer called on the federal government to accelerate the development of rules for international emissions trading with the US in order "to effectively deal with transboundary air pollution problems."
Originally, Ontario's trading scheme excluded so-called "indirect" emissions credits, which are created when zero emitters, like wind turbines, displace fossil fuel generation on the grid. But intensive lobbying by independent power producers forced the government to reconsider. The regulation allocates one Kt of the NOx emission allowance and four Kt of the SO2 emission allowance to renewable energy and energy efficiency activities.
"It's a critical turning point in Ontario," says Fred Gallagher, president of the Canadian Wind Energy Association. "It has opened up a lot of opportunity that was plain and simply going to be shut down."
Jake Brooks, executive director of the Independent Power Producers Society of Ontario (IPPSO), called the new regulation a "welcome first step." But he points out that the renewable energy allowances are only a fraction of the total. IPPSO, says Brooks, would like the set-asides increased to 1.8 Kt for NOx and 7.9 Kt for SO2 in 2002, and then by 2% a year until they account for 20% of the total cap.