1. Ontario Industrial EPS Proposal IETA Insights for Ontario Stakeholders Clean Economy Alliance Webinar 15 March 2019 Toronto, Canada

2. About IETA
Collective voice of business on carbon pricing, markets and finance
Global non-profit association
Policy design, thought leadership, global capacity building, best practices, knowledge transfer
Global Partnerships & Dialogues with UNFCCC, World Bank, OECD-IEA and many, many more!

3. IETA Core Business Messages
Climate Results (Environmental Outcomes) Matter
Real, measurable GHG reduction outcomes.
Least-Cost Options & Compliance Flexibilities
Driving real reductions at least-cost to consumers & business
Compliance flexibilities (trading, linking, offsets)
Policy Certainty & Stability
Clear, consistent pathways and signals for compliance and investment
Ensuring Competitiveness
Leveling the playing field with trade partners and competitors
Avoiding Regulatory Overlap & Duplication
Ensure true complementarity across supplementary policies

5. The (Bigger) Known Unknowns…
Constitutional Reference Cases
Federal OBPS
Final Performance Standards?
Federal Market Infrastructure and Participation?
Eligible Offsets? What? From Where? Vintage?
International “Recognized Units”?
Usage Constraints?
CFS Interactions?
Alberta Election
Becomes All or Partial Backstop Jurisdiction?
Federal Election
“International Cooperation” Outlooks?

6. Overview: Constitutional Reference Cases (SK-ON)
SK/ON position: federal carbon price seen as unconstitutional
Saskatchewan hearing took place on February 2019
Ontario hearing scheduled for April 2019
Clarity by end of Spring 2019? Then likely Supreme Court time…
Issues
Cases are precedent-setting – addressing core elements of constitution
Policy uncertainty and government disorganization causing significant financial and investment uncertainty and risk
IETA as Intervenor
Accepted by both courts to intervene in the constitutional reference cases
IETA is the only official business intervenor in both cases
Multi-sector business voice supporting climate action and policy stability

7. IETA Messaging: OBPS Design & Implementation
High-Level Messages
Support flexible compliance and cost-effective approach
Enable market linkages and Pan-Canadian “cooperation”
Complement and leverage existing programs
Recognize use of offsets and credits from existing systems
Complement international rules and systems
Consider broader cumulative impacts
More Detailed Input on Proposed OBPS Regulatory Framework
Usage and expiry limits on compliance units
Voluntary participation and early opt-in
Non-facility market participation
Commitment to a federal offset system
Treatment of electricity under the output-based standard

8. IETA Messaging: Ontario Proposal
Support flexible compliance and cost-effective approach
Enhance economic performance and preserve competitiveness
Blend private and public revenue to support low-carbon transition and drive deeper reductions
Avoid duplicative and non-complementary measures
Enable policy harmonization and alignment
Develop a robust, collaborative carbon offsets program that diversifies and balances the economy
Ensure complementarity with international rules and systems

9. IETA Messaging: “International Cooperation”
Paris Agreement Markets’ Provisions (Article 6)
Cooperative Approaches – accounting for ITMOs
Decisions still playing out through COP25
Opportunities for Canada?
Holds significant potential to reduce emissions and enhance ambition
IETA Article 6 Project - estimated annual potential in cost savings:
2030 = ~ $330 billion (CA$ 2015)
2050 = ~$460 billion (CA$ 2015)
2100 = ~ $1.3 trillion (CA$ 2015)

10. Pan-Hemispheric Carbon Pricing Cooperation