Ontario Liberals rethink $1.9B cap-and-trade projection in uncertain market

Ontario Premier Kathleen Wynne says her Liberal government might have to lower its expectations for how much money its cap-and-trade plan will bring in.

The province originally expected to raise about $1.9 billion from the plan. Quebec and California,already members of the regime Ontario will join next year, only sold about 11 per cent of their emission permits last month. It was widely viewed as a disappointing showing.

• Ontario budget 2016: Liberals' cap-and-trade plan expected to generate $1.9B annually
• Kathleen Wynne says cap-and-trade plan to increase gas prices by 4.3 cents a litre

"It's a market. We know that there will highs and lows in the market," Wynne told Chris Hall on CBC Radio's The House.

"It was this round that it was not as good. We just don't know what the market will be. That's our projection.If we have to revise the projection then we will."

Under a cap-and-trade system, the government sets a cap on the total amount of carbon emissions allowed and issues permits to companies allowing them to burn a set amount. If they exceed that amount they must buy extra permits, either from the government or from companies that have reduced their emissions.

The government promised that cap-and-traderevenue, no matter how much it is,will be spent on initiatives to cut greenhouse gases,including investments in public transit, clean technology and retrofitting homes and businesses to be more energy efficient.

The province's largerclimate change planwill be released"very soon," said Wynne.

A published report based on a leaked draft copy said the province would phase out fossil fuels for home heating, something the premierdenies.

"We're not banning natural gas, in fact we're expanding natural gas into rural and northern communities. There's $230 million in our last budget that is going to make that expansion. But we're going to be tackling challenges in the building sector and transportation, because that's where the greenhouse gas emissions need to be reduced," she said.

'Challenging' decisions made

Wynne said electricity prices won't go up, but there "will be some small increases in some areas like home heating."

The premier acknowledged thather government's stance on climate change may be bringing her down in the polls.

"I think we're doing some hard things. We've made some decisions that are challenging. It is a real challenge to tackle climate change. There are going to be voices, you know, from people who don't believe we shouldbe tackling climate change, and those voice are strong and loud," she said.

"We needto win those people over, or more than that we need to demonstrate that this is the best interest of their families as well."

Listen to CBC Radio'sThe Houseat 9 a.m. (9:30 NT) on Saturdays. Follow on Twitter@CBCTheHouse.