Ontario’s first auction of emission allowances under its new cap-and-trade program went off without a hitch, according to the province. Ontario put up almost 25.3 million 2017 vintage allowances, and the entire inventory sold at an average price of $18.08. It also put up 3.1 million 2020 vintage allowances, and sold 812,000 at an average price of $18.07. Each allowance represents one tonne of carbon dioxide equivalent.
The auction, held on March 22, 2017, poured $472 million into Ontario’s Greenhouse Gas Reduction Account. By law, funds in that account may only be spent on greenhouse gas reduction initiatives and administrative expenses.
Ontario has already committed $325 million to its Green Investment Fund, which has similar objectives. That fund was included in Ontario’s 2015-16 budget and was framed as a “down payment” on cap-and-trade revenue.
It’s unclear whether the proceeds from the first auction will be used to reimburse the treasury for the $325-million down payment, or if they will be incremental. According to a Ministry of the Environment and Climate Change spokesperson, the ministry has not made any final decision on how the proceeds of the auction will be invested.
However, the ministry has developed a comprehensive process, including evaluation criteria, which will be applied against requests for funding. The objective, according to the ministry, is to ensure that projects are assessed fairly and objectively.