With an upcoming vote set to take place in Washington state regarding the future of its cap-and-invest program, partner Tyson Dyck spoke with Carbon Pulse on how Ontario's cap-and-trade scheme fared when it was introduced six years ago.
Carbon Pulse reported that, surrounding the Washington state vote slated for November, "market participants are highlighting the uncertainty surrounding hundreds of millions of dollars in carbon allowance holdings that could be rendered worthless if the scheme is scrapped."
The publication says Ontario's experience provides a "cautionary tale" for Washington state. Ontario's ETS was launched in 2017 before it was dismantled by Doug Ford in the years following. Millions of these carbon permits that were purchased at the time were left stranded, and large emitters were barred from being reimbursed on the basis that these entities had already transferred the costs to consumers, the article says.
Read: Government of Canada releases framework for an oil and gas sector emissions cap
In addition, the Provincial Government prohibited carbon allowance buyers to launch legal action for financial losses from the repeal, which surprised many participants, Tyson said.
"[Buyers] went to quarterly actions, purchased allowances anticipating their compliance obligations, and were holding these permits to be retired in their account, and then suddenly found them to be worthless," Tyson said.
"The Ontario experience still lingers in people's minds as a fundamental risk with any type of carbon market that relies on a regulatory regime to be in place."
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