The Ontario Trucking Association says until the Ontario government reveals the details of the cap and trade program announced today by Premier Kathleen Wynne, it is impossible to say what the impact on the industry will be.
Today’s announcement means the province will soon be joining Quebec and California by introducing a carbon cap and trade system. But it remains to be seen how and what carbon caps will be applied to transportation fuel and how any revenue generated will be used, says OTA president David Bradley. The premier indicated that details of the plan will likely become known by this autumn.
Cap and trade systems are typically applied to stationary gross emitters as opposed to mobile sources such as trucking. However, the industry will likely be impacted indirectly through increased fuel prices and perhaps higher equipment costs.
“The trucking industry is already taking action by voluntarily investing in GHG reduction technologies and devices,” Bradley said. “On the regulatory front, Ontario recently introduced a biodiesel mandate supposedly to reduce GHGs and the US and Canadian federal governments jointly introduced a new North American fuel economy/GHG reduction regulation for heavy trucks.
“More can always be done, especially if it encourages investment in carbon reduction. For a cap and trade system to work, it would need to be transparent and reinvest what motor carriers will pay, either directly or indirectly through higher prices, to help them expedite the shift to current, proven fuel-saving technologies and next generation solutions,” he says. “However, if the sole outcome of a cap and trade system is to raise the price of diesel fuel and/or help some other industry reduce its carbon footprint, then we would obviously be very concerned.”
In recent years, OTA has promoted a strategy it has dubbed enviroTruck, which would provide incentives to encourage investment and accelerate the penetration of “green” technologies into the industry. (Quebec provides a level of incentive to truckers to help them transition their fleets more quickly).
“Fuel is the second largest component of cost for most trucking companies, so it is in our members’ interests to increase their level of fuel efficiency and in so doing reduce GHG emissions,” says Bradley. “While diesel fuel prices have softened a bit over the past year or so, they were previously running at or near record highs and we fully expect them to resume an upward trajectory. Moreover, none of our neighbouring US states or our neighbouring province of Manitoba currently have a cap and trade system, which, all other things being equal, would mean cheaper prices there.”
Not only are carriers investing more in fuel saving technologies and devices than ever before, but North American fuel economy/GHG reduction standards are about to become a whole lot tougher in the next few years, Bradley added. “What we have been seeking is a partner in government to work with us to retool our fleets at a faster pace and therefore to bring about GHG reductions more quickly.”
OTA will soon be meeting with Ontario’s Minister of the Environment and Climate Change, Glen Murray, to discuss how the government and the industry can move forward together.