McGuinty confident Ont., Quebec could still form cap-and-trade system

The two neighbouring provinces have been working to develop their own so-called cap-and-trade system that would limit industrial emissions and trade credits to reduce greenhouse gases, McGuinty said.

But Quebec has since followed suit with Manitoba and British Columbia and become a partner in the Western Climate Initiative, which is expected to release draft regulations for North America's first cap-and-trade system next week.

McGuinty suggested that hasn't dashed his hopes of forming a separate agreement with Quebec Premier Jean Charest.

"You can dance with a couple of partners, just not at the same time," he said.

McGuinty's stance has puzzled environmental groups, who say Quebec's membership in the regional partnership could stymie Ontario's plans.

"I don't think it's a complete roadblock, but it certainly makes it more difficult because now Quebec will be completely integrated into another system," said Mark Lutes, a climate change policy analyst with the David Suzuki Foundation in Toronto.

Ontario's resistance to adopting California-style vehicle emission standards seems to be the biggest obstacle to WCI membership, environmentalists say.

McGuinty has resisted those standards, saying it would prove too costly for the province's ailing auto industry, which has been rocked by news of massive layoffs in recent days.

Cap-and-trade systems have been lauded as a major tool to significantly reduce industrial pollutants and slow climate change.

Under the system, governments determine which sources will be covered - such as manufacturing and oil and gas production - and set caps on emissions.

Companies are required to have permits covering their annual emissions, but those who produce fewer emissions can sell their surplus.

But all the talk about cap-and-trade is just a ruse to deflect attention from McGuinty's failure to act on a climate change plan he unveiled last summer, Ontario's opposition parties charged.

McGuinty set ambitious emission-cutting targets for the province, but still hasn't made good on his long-standing promise to shut down Ontario's biggest polluters - its coal-fired energy plants, said Progressive Conservative critic Toby Barrett.

"We have seen none of them close last year as promised," he said. "To hear a 2014 (target) date, right away we think of that election promise and really have no confidence he's going to meet that."

The benefits of joining WCI, whose partners include seven U.S. states, rather than forging a separate agreement with Quebec is a no-brainer, said NDP critic Peter Tabuns.

"The Western Climate Initiative is a market of what, 30, 40, maybe 50 million people? Ontario's 13 million," he said.

"I mean, where are you going to concentrate your thinking and your actions? You're going to deal with the bigger market. So Ontario is in a situation where it could be a very junior partner, if Quebec was interested at all."

It's possible that Ontario could find a way to link itself to Quebec, given that the design of the WCI system - and others currently being contemplated in North America - are still at an early stage, Lutes said.

"It would have made more sense, I think, for Ontario and Quebec to do something between themselves when they're either both outside or both inside the same system," he added.