Ontario And Quebec To Establish Interprovincial Cap-And-Trade Regime

On June 2, 2008, the premiers of Ontario and Quebec signed a Memorandum of Understanding (MOU) committing the two provinces to establish a joint greenhouse gas (GHG) emissions cap-and-trade regime. The MOU invites other provinces and territories to collaborate with Ontario and Quebec in implementing the regime by as early as January 1, 2010.

Although it only outlines a general framework for action, the MOU makes it clear that the Ontario-Quebec regime will be different from the current incarnation of the federal government's proposed Regulatory Framework for Air Emissions (the Framework).¹ For example, while the Framework proposes limiting the intensity of industrial GHG emissions (also known as a "soft" or "floating" cap), the MOU proposes setting absolute caps on these emissions and explicitly rejects intensity-based targets. The MOU also contemplates a 1990 baseline year for calculating reduction