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Cap and trade system must encourage investment in productivity, emission technologies

Published by Brad Fougere on April 13, 2015

Today’s deal introduced by the governments of Ontario and Quebec launches both provinces on a path towards a cap and trade system to address greenhouse gas emissions.

The details of the cap and trade plan have yet to be announced but will be critical in determining how effective the new system will be in lowering greenhouse gas emissions and sustaining investment and economic growth in both provinces.

Cap and trade needs to encourage investment by industry in the technologies that will lead to lower GHG emissions. Otherwise it will turn out to be another tax on industry that will slow the investments that have already allowed Ontario and Quebec manufacturers to make significant strides in reducing emissions.

"We need to ensure that doing business in Ontario and Quebec is more attractive than in competing jurisdictions or companies will relocate elsewhere — that’s not good for either provincial economy," said Canadian Manufacturers & Exporters (CME) President and CEO Jayson Myers.

The provinces of Quebec and Ontario have made significant progress addressing climate change. Ontario's emissions have fallen by 20 percent since 2005 while emissions in Quebec are down by 9 percent. Manufacturers in both provinces have also been successful introducing technologies aimed at reducing greenhouse gas emissions since before 1990.

When companies replace old equipment with new, a plant runs more efficiently, productivity is increased and emissions are reduced. In order to sustain our economic competitiveness, cap and trade needs to be accompanied by incentives that encourage investment in productivity-enhancing technologies and machinery and equipment that have been shown to reduce emissions.

"It is vital that both governments work with industry to find the best way forward for the manufacturing sector to ensure the system is structured to encourage the investments we require in new technologies that will lead to lower greenhouse gas emissions and a stronger economy," Myers said.

Found in: Cap and Trade

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