The price of fighting climate change will be an additional 4.3 cents per litre for gasoline and $5 a month on the average natural gas bill.

But Premier Kathleen Wynne, whose government will formalize those increases in Thursday’s provincial budget, insisted consumers could also expect lower electricity rates down the road.

Fuel costs will begin to rise when Ontario’s carbon-pricing regimen with Quebec and California takes effect next January, said Wynne.

“We need to deal with climate change,” the premier said Wednesday at Ryerson University.

“In terms of gasoline, we expect that there would be in the order of an average of 4.3 cents increase,” she said, noting the effect extreme weather is already having on everything from infrastructure damage to insurance rates.

“The cost of doing nothing is much, much higher than the cost of going forward and reducing greenhouse-gas emissions.”

Under the cap-and-trade system, businesses have greenhouse gas limits — or caps — and those coming in under theirs can sell or trade credits.

That creates an economic incentive to pollute less and should promote the use of greener energy sources.

Wynne, whose government is spending billions on new public transit to get people out of their cars, emphasized that green innovations should reduce other costs for Ontarians.

With both gasoline and natural gas costs dropping due to record-low oil prices, the Liberal government is banking on drivers and ratepayers not being jolted by sticker shock.

Still, the average Ontario homeowner will pay about $60 more annually for the natural gas they use to heat their homes starting next year, which offsets a recent price decrease.

Environment Minister Glen Murray on Wednesday afternoon tabled the legislation outlining the cap-and-trade framework designed to reduce Ontario’s greenhouse gas emissions to 15 per cent below 1990 levels by 2020, 37 per cent by 2030, and 80 per cent by 2050.

The new scheme will bring in an additional $1.3 billion to the treasury, but Murray emphasized that by law all the money must go toward climate-change initiatives so there shouldn’t be an adverse effect on consumers.

“Is this going to be a big noticeable change? No. Are we concerned about it? Yes. That’s why money from the cap-and-trade system can only be spent on one thing — things that reduce greenhouse gas emissions,” he said of the Climate Change Mitigation and Low Carbon Economy Act.

Some funds will go toward rebates for retrofitting homes and buildings to make them more energy efficient, additional public charging stations for electric cars, among other initiatives.

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“Non-polluting energy sources are going to become more affordable because we’re pricing pollution so the non-polluting ones have an advantage . . . and we’re making massive investments in transportation and buildings that lower costs.”

Murray conceded that 14 per cent of Ontario businesses — so-called “trade-exposed” industries, such as cement, that directly compete with jurisdictions that don’t yet price carbon — will be given a brief transitional reprieve from the caps.

Ultimately, all companies will have to abide by the rules or face fines of up to $10 million for polluting.

NDP Leader Andrea Horwath said “most Ontarians would want to do their part.”

“New Democrats have been pushing for a long time to get the government to put forward a climate-change plan and in fact have been very supportive of the cap-and-trade type of model,” she said

But Horwath said it’s “worrisome” that big polluters get a break while ordinary Ontarians get slapped with higher fuel costs.

Progressive Conservative MPP Vic Fedeli (Nipissing) said everyone needs to hang onto their wallets.

“What you’re going to see after the budget . . . is that it costs more money to live in the province of Ontario,” Fedeli warned.

Green Party Leader Mike Schreiner said “the Liberals are sending the wrong message by giving big polluters a free ride.”

“People want to take action on the climate crisis, but they want carbon pricing to be fair and effective,” said Schreiner, whose party advocates a carbon fee and a cap-and-trade system that limits industry exemptions and pollution permits.

Environmental Defence’s Keith Brooks predicted the groundbreaking measures could “enable this province to capture more of the jobs and economic opportunities in the low-carbon economy.”

“If used properly, revenue from cap-and-trade can further reduce carbon emissions by funding complementary climate actions.”

With files from Rob Ferguson

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