In a split decision, an Ontario court says Doug Ford's government broke the law when it scrapped the cap-and-trade system, but the court won't force Queen's Park to reinstate the program that gives companies incentives to reduce carbon emissions.

Greenpeace had challenged the cancellation on grounds the government did not hold public consultations before making the decision, a process required by Ontario's Environmental Bill of Rights (EBR).

The Progressive Conservatives argued that because they campaigned on a promise to end the program, the 2018 election, in effect, served as a public consultation on the issue.

Two of the three divisional court judges who heard the case ruled public consultations were still required and the PCs did not follow the law by ending the program on the basis of election results.

"A general election is in no way 'substantially equivalent' to the process of public participation prescribed in the EBR," wrote Justice David Corbett in his ruling.

"The EBR provides for a comprehensive process that goes well beyond the blandishments of the campaign trail," added Justice Graeme Mew.

However, the suit by Greenpeace was ultimately dismissed because two of the three judges chose not to make a formal declaration that could revive the program.

Despite finding problems with the government's actions, Mew said there was "no legal efficacy" to grant Greenpeace's application.

In a ruling that largely absolved the government, Justice Frederick L. Myers noted legislation introduced by the Tories in 2018 allowed them to lawfully cancel the program without consultations.

"The regulation whose legality we are asked to consider has been repealed and is no longer in existence," he said.

Ford 'dragging' Ontario away from climate action

Ontario's former cap-and-trade system, which linked markets with Quebec and California, aimed to lower emissions by capping the amount of pollution companies in certain industries were allowed to emit.

A cap-and-trade system sets a limit on greenhouse gas emissions, but allows companies below the cap to "trade" their unused allowance to larger polluters.

"We are pleased that the divisional court dismissed Greenpeace's application for judicial review. Our government campaigned on a clear commitment to eliminate the cap-and-trade program that made life costly for Ontario's families and businesses," said Environment Minister Jeff Yurek in a statement.

Jeff Yurek, Ontario's Minister of Environment, Conservation and Parks, said eliminating the program removed a 'burden' from businesses. (Chris Young/Canadian Press)

The PCs say eliminating the program has saved the average Ontario family around $260 per year.

But according to Greenpeace, the cap-and-trade program was making strides toward reducing greenhouse gas emissions and growing the province's green economy.

"Although we did not receive the precise outcome we were hoping for, the majority of the court agreed that what Premier Ford's government did was illegal," said Ian Miron, a lawyer for the environmental group Ecojustice, which represented Greenpeace at court.

"The decision today does not alter the fact Ontarians want to see action to combat climate change, and Premier Ford is dragging the province in the opposite direction," Miron continued.

The government claimed the program was costly, ineffective and killed jobs, and it replaced the program with its own environmental plan that does not include a price on carbon emissions.

The cancellation of cap-and-trade prompted the federal government to implement its own carbon tax in Ontario — a move Ford's government now wants to challenge at the Supreme Court of Canada.

On Thursday, the watchdog group Environmental Defence released a new report that looked at whether or not the government was adhering to its own plan to fight climate change and found "next to no progress" had been made.