Ontario Releases Climate Change Action Plan

On June 8, the Ontario government released its long-awaited Climate Change Action Plan, which calls for up to $8.3 billion in government spending on climate change initiatives from 2016 to 2020.¹ Together with the province's cap-and-trade system, the Action Plan is intended to support the province's goal of reducing greenhouse gas (GHG) emissions to 15% below 1990 levels by 2020, 37% by 2030, and 80% by 2050. Many of the policies in the Action Plan are only described at a high level, leaving important details still to be determined.

What You Need To Know

• The 86-page Climate Change Action Plan outlines over 70 different policies grouped into 28 different "actions," many of which will be refined in the coming months.
• The programs being proposed under the Action Plan will be funded by revenue from cap-and-trade, which is expected to generate up to $1.9 billion per year, primarily through the auctioning of emissions allowances.
• Key programs include approximately $3 billion in incentives to retrofit buildings and reduce their energy consumption, $1.3 billion to offset the cost of GHG reduction initiatives that are currently funded through electricity bills, $1.2 billion to help industrial facilities cut emissions, $675 million to accelerate the expansion of the GO regional rail network and increase service levels, $375 million for research and development of low-carbon technologies, $290 million to facilitate the use of low-carbon trucks and buses, and $277 million in electric vehicle incentives.
• The actions expected to result in the largest emissions cuts by 2020 are: energy efficiency programs for industry (2.5 million tonnes); the low-carbon fuel standard (2 million tonnes); the renewable content requirement for natural gas (1 million tonnes); switching freight transport and buses to low-carbon fuel (400,000 tonnes); and reducing emissions across government (200,000 tonnes).

Highlights of the Climate Change Action Plan

Retrofitting buildings and homes

Under the Climate Change Action Plan, new grants, rebates and other subsidies for retrofitting buildings and installing low-carbon technologies (including geothermal, solar power and other forms of electric heating) will total up to $3 billion. Funding for eligible projects under many of these programs will be administered by a new Green Bank, which has yet to be established. The program also proposes Building Code amendments that would include long-term targets for net zero carbon emission small buildings that will come into effect by 2030, with certain initial amendments coming into effect as early as 2020. The Action Plan does not elaborate on the nature of the "net zero" standards that are being considered.

In addition, up to $1.3 billion of cap-and-trade proceeds will be used to offset the cost of GHG reduction initiatives that are currently funded through residential and commercial electricity bills. Again, the Action Plan does not contain details on how electricity bills will be adjusted, or on the specific initiatives that will be funded by cap-and-trade proceeds going forward.

Cutting industrial emissions

Up to $1.2 billion will be made available to help factories and other industrial businesses reduce their carbon footprint, such as by converting to more energy-efficient equipment and participating in clean energy projects.

Expanding rail transit and encouraging cycling

Up to $675 million will go toward accelerating the deployment of the GO regional rail network and increasing service levels. Up to $225 million will be spent expanding cycling infrastructure, including additional bike lanes and bike parking at transit stations.

Funding research and development

Up to $375 million will be allocated to clean technology research and development. This includes $140 million for a Global Centre for Low-Carbon Mobility, which will be based at an Ontario post-secondary institution to both advise the government on low-carbon transportation and direct funding for research and development.

Popularizing electric vehicles and switching to clean freight transport

Up to $290 million will be available for increasing the use of low-carbon trucks and buses, including providing incentives to eligible businesses that want to switch to cleaner vehicles and building a network of low or zero carbon fuelling stations.

Up to $277 million in incentives for electric vehicles will entail a rebate of up to $14,000 for every electric vehicle purchased, up to $1,000 to install home charging, elimination of the provincial portion of the HST on electric vehicle sales, and additional income-based subsidization for replacing older vehicles with electric vehicles. The Action Plan aims to expand electric vehicle sales to 5% of all vehicles sold in the province by 2020.

Other key measures

Up to $175 million will be spent on making the Ontario government carbon neutral by 2018. Planned measures include increasing telecommuting, switching to electric vehicles, retrofitting buildings, and ensuring low-carbon procurement in projects across the province.

Up to $155 million in incentives will be available for fuel distributors to boost the availability of high-blend sustainable biofuels and develop required infrastructure upgrades. Without specifying any details, the Action Plan also calls for new standards to increase the percentage of renewable content in transportation fuels as well as introduce a renewable content requirement for natural gas.

_________________________

¹ Available at: https://www.ontario.ca/page/climate-change-action-plan.

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

For permission to republish this or any other publication, contact Janelle Weed.

© 2025 by Torys LLP.

All rights reserved.