Snap Election Announcement
Ontario Premier Doug Ford has called an early provincial election for 27 February 2025, moving it up from the previously scheduled date in June 2026. This decision comes in response to U.S. President Donald Trump's threat to impose a 25% tariff on all Canadian imports, a move that could significantly impact Ontario's economy, particularly its manufacturing sector. Ford believes that securing a strong mandate through an early election will better position his government to counteract the potential economic challenges posed by these tariffs. Ontario has also released the “Fortress Am-Can” plan for a strategic alliance between Canada and the U.S. to strengthen economic and resource security.
This election marks Ford's bid for a third consecutive majority for his Progressive Conservative Party, following victories in 2018 and 2022. In addition to addressing the tariff issue, the early election call has sparked criticism from opposition parties, who accuse Ford of attempting to divert attention from a police investigation into his government's environmental policies. Political analysts also question the necessity and timing of the election, noting that international trade matters typically fall under federal jurisdiction. Despite these critiques, Ford maintains that an early election is essential to effectively address the potential economic impacts of the proposed U.S. tariffs.
Contenders in the election include Marit Stiles, Bonnie Crombie, and Mike Schreiner. Marit Stiles and Bonnie Crombie will lead their respective parties, the Ontario NDP and the Ontario Liberal Party, in their first election campaigns as leaders. Mike Schreiner of the Ontario Green Party is the most experienced among the main party leaders, having held his position since 2009.
While the Ontario Emissions Performance Standards (EPS) and other regulated emitter programs in Canada will continue to function as designed, a snap provincial election occurring in parallel to anticipated changes at the federal level raises a degree of uncertainty with regards to carbon pricing.
Carbon Pricing in Ontario
Ontario has experienced instability in its carbon pricing programs, shifting through three systems in just five years. After the Provincial Liberals introduced a Cap-and-Trade program in 2017, the Ford government repealed it in 2018, leading to stranded assets and legal disputes. This was followed by the federal Output-Based Pricing System (OBPS) in 2019, which was later replaced by Ontario’s EPS in 2022. The Ontario Ministry of Environment, Conservation and Parks (MECP) created the EPS program to regulate the GHG emissions of industrial facilities. The Ontario EPS program only replaced the Federal OBPS, while the Federal Fuel Charge continues to apply to fuels combusted in Ontario.
This series of events and navigating between various programs caused administrative challenges and overall inefficiencies for carbon pricing programs in the province, resulting in a loss of investments due to regulatory uncertainty.
Currently, Ontario is committed to reducing its emissions by 30% below 2005 levels by 2030, as part of Canada's overarching climate targets set under international agreements like the Paris Accord. The EPS program recognizes the use of carbon capture and storage in a geologic formation to lower overall regulated emissions. In addition to the EPS, the province introduced the proposed Geologic Carbon Storage Act as part of Bill 228, the Resource Management and Safety Act, 2024, aiming to establish a robust framework for the safe and permanent storage of carbon dioxide in geological formations, with the comment period closing earlier this month.
Dynamics with Federal Election
A Ford victory would also secure another term for the premier ahead of a federal election, which polls indicate could result in a conservative majority. Locking in another term prior to the federal election could be strategic, as it is not uncommon for Ontario to elect a provincial government in opposition to the federal ruling party.
Recent CBC polling as of 27 January 2025 indicates that Pierre Poilievre’s Conservative Party is at 44%, with a 96% probability of winning a majority, potentially ushering in a government with a markedly different climate policy approach. A Poilievre-led government would likely repeal the consumer-facing carbon fuel charge, framing it as a cost-of-living issue. However, industrial carbon pricing programs are expected to remain, albeit with changes to the federal benchmark, stringency requirements, and other design elements.
Going forward, upcoming political shifts in the United States and Canada’s governing parties are poised to reshape the landscape of climate and energy policies across North America. The return of Donald Trump to the presidency and the potential rise of Pierre Poilievre’s Conservative Party in Canada set the tone for a period of uncertainty and transition. With elections occurring at the provincial level in Ontario as well as federally, this may cause investors to take a “wait and see” approach as they seek political stability for long-term projects.