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What Is the Cap And Trade All About?

Just when we were about to settle in and enjoy the low gas prices we got hit with a move  by the Ontario government with its Cap and Trade plan. As a result of this plan you can expect to pay 4.3 cents per liter more for your gas. When it comes to your natural gas for your home use you can look at a increase of about five dollars a month.

To offset this big a blow the Ontario Premier was touting how now electricity users will be protected. This is protection against hikes in the rate and even eluded to the possibility of rates going down. How this is supposed to work is that the auction revenues that are raised in regards to the carbon emissions to industries will help to keep the electrical costs in check.

Of course the government is going to be making a tidy sum off of this Cap and Trade program as they expect to raise 1.3 billion during its first operating year. That money isn’t going to be spent on lowering the deficit but instead will be dedicated to lowering gas emissions from greenhouse gas.   This a big change and is not supposed to take effect until next January.

What the Cap and Trade system is, is a program that will dictate a maximum allowable level of pollution.   Companies will have to specify how much carbon they are going to be emitting per year and they will be issued a permit.   If they exceed the limit that they have indicated then they will be penalized for this. Should a company determine that it wants to emit more than the limit it will have to buy extra permits which means that they can trade their permits which brings us to the name of Cap and Trade.

It would appear that the Ontario government is forming an alliance with Québec and California by linking it to their systems.   This means that companies that are based in Ontario Canada by permits can sell permits to companies that are located in California and Quebec, and vice versa.

There will be some free permits that are given to some companies who may suffer from competition where Cap and Trade is not taking place.   If a company were in a zone where cap and trade were active it could mean that company would move to a cap and trade free zone .

While the specifics are still somewhat sketchy as to exactly what kind of impact this is going to have on the average person, the general consensus is that gas prices will go up.   It has been deemed that the transportation sector of any industry is the biggest source of carbon emissions. It is said that the higher gas prices might encourage people to drive their cars less

Of course the opposition is not receiving the Cap and Trade news well and are suggesting that it is just might be another cash grab on the part of the Liberal government.

 

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