Gas prices spike across GTHA as Cap and Trade program goes into effect

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Gas stations across the GTHA saw an increase of 5 cents per litre at the pumps this morning, as a result of the province’s new cap and trade program that went into effect on January 1st. The program, aimed at reducing greenhouse gas emissions, is expected to cost the average Ontario household about $13 more per month to fuel up and heat a home.

The cap and trade program works by “capping” how many tonnes of greenhouse gas emissions businesses can emit. The cap drops each year to encourage lower emissions. Businesses are provided with permits or “allowances”. If a business reduces emissions, they can then sell or trade these allowances to businesses that cannot. Simply put, if a business pollutes less, they pay less, thus encouraging greener strategies and technologies. Companies must purchase these allowances; the costs will then be recovered by Ontarians at the pumps and on their home gas bills.

According to the province, cap and trade is projected to generate about $1.9-billion per year in proceeds. Premier Kathleen Wynne says all of these proceeds will go toward green projects in the province, such as electric cars, cleaner trucks, energy retrofits on buildings, and will also help businesses become greener.