While the inner workings of carbon policy are not usually fodder for broad public dialogue, there is certainly one aspect of Ontario’s upcoming cap and trade program generating wide audience participation: Where will all the new revenue go?

The proposed cap and trade program could represent $1-2 billion in new annual revenues, introducing a critical opportunity for the province to leverage the policy to generate even more emissions reductions. Recently, Move the GTHA, a collaborative project funded and co-initiated by TAF and Evergreen CityWorks, sent a letter to Premier Kathleen Wynne recommending that a significant portion of the province’s cap and trade revenues fund active transportation and public transit. Investing in activity that reduces transportation emissions – the largest source of greenhouse gases in Ontario – offers the best case for leveraging the cap and trade program to maximize emission reductions.

Move the GTHA’s letter recommended that the cap and trade policy:

  1. Directly tie revenues to initiatives that help Ontario achieve 2020 and 2050 greenhouse gas reduction targets.
  2. Generate funding for low-carbon transportation, such as public transit and the Big Move, critical areas that already face a funding gap.
  3. Put a cap on transportation fuels to encourage a behaviour shift for individuals and businesses toward the use of alternatives.

One critical component of our recommendations is that the cap should apply broadly throughout the economy to send price signals to help shift corporations and citizens towards low-carbon choices. The other aspect is using the revenues to further the carbon reduction impact of the policy by investing in low-carbon infrastructure. Looking to other jurisdictions, Quebec already allocates two thirds of its cap and trade revenue to transit. By increasing investment in this sector, we guarantee reductions in greenhouse gas emissions and also see co-benefits such as addressing congestion and reducing chronic diseases related to inactivity and air pollution.

Surely there will be many competing voices as various industries vie to be recipients of Ontario’s new potential funding mechanism, but amidst all the chatter, it is critical that that the government remains focused on the cap and trade program’s fundamental mandate to create meaningful carbon reductions.

Click here for more details and to read the full letter from Move the GTHA.