Carbon Pricing and Competitiveness Pressures in Ontario
Highlights in Ontario
Ontario’s manufacturing sector is mostly unexposed to competitiveness pressures from carbon pricing. Other manufacturing, including industries such as vehicle and aerospace manufacturing, is highly traded, but is generally not emissions intensive. Other manufacturing makes up around 15% of Ontario’s GDP.
Only a few specific manufacturing sectors—steel, chemicals, petrochemicals, fertilizer, and refining—display a notable exposure to competitiveness pressures. Though collectively these sectors make up less than 1% of provincial GDP, they are responsible for one-quarter of Ontario’s industrial GHG emissions.
Interestingly, some of Ontario’s manufacturing sectors may be better positioned to compete relative to those in other provinces. Ontario’s pulp and paper sector, for example, is less emissions intensive than the pulp and paper sectors in Alberta and Nova Scotia, largely because its electricity supply is less carbon intensive, and thus its indirect emissions are smaller. If carbon-pricing policies were evenly implemented across all provinces, Ontario firms could face lower carbon costs and thus have an advantage relative to those in Alberta.