Premier Kathleen Wynne is defending the Liberal government's decision to introduce a cap-and-trade program

next year to combat climate change, calling Ontarians "very bad actors" when it comes to creating greenhouse gases.

Wynne said Ontario may have led the way in fighting climate change by shutting down its coal-fired electrical generation stations, but said the province must do more even though it produces only fraction of the world's greenhouse gas emissions.

"When I see Ontario in the context not just of the country but of the continent and the globe, we have to play a role," she told the Niagara Chamber of Commerce on Tuesday.

"And even though we're a small percentage overall of the global greenhouse gas emissions, we're very bad actors in terms of our per capita creation of emissions."

The Liberal government predicts cap-and-trade will add about $5 a month to home heating bills and about four cents a litre to the price of gasoline at the pumps when it kicks in Jan. 1.

Business groups have expressed concerns about the economic impact of cap-and-trade, which will require polluters to buy emission credits that they can sell if they come in under their limit or buy

from others if they can't meet their targets.

"I know there's some anxiety in the business community," Wynne said.

Companies being urged to innovate

The Liberals chose cap-and-trade over a carbon tax because the money raised from emission auctions will be used to help businesses reduce their greenhouse gas emissions, in part by developing new, clean technologies, she added.

"It's not just a financial burden," said Wynne. "They actually get money back in order to innovate, so that's how they will reduce their emissions and be supported by the system."

The world is seeing more severe storms because of climate change, said Wynne, who insisted the cost of doing nothing would be much greater than cap-and-trade.

"We are developing the capacity to develop clean technologies that we can obviously use here in industry to reduce greenhouse gas emission, but we can also export that technology," she said.

"That's the kind of combined motivation."

'It goes up and down'

Wynne insisted she wasn't worried that two auctions for the cap-and-trade market with Quebec and California that Ontario is set to join next year sold just a fraction of available emission allowances.

Only 35 per cent of the available carbon pollution credits were sold in California and Quebec's latest joint auction in August, and that was up from just 10 per cent in the previous round.

"It is a market and it goes up and down," said Wynne. "Overall it has been a very productive market. The key thing is that we set targets and we see those greenhouse gas emissions go down."

Money raised from the emissions auctions will be used to help Ontario companies reduce their greenhouse gases, added Wynne.

"That money will be reinvested in businesses to help them to make the transmission and to develop innovative strategies," she said. "We'll be measuring the reductions in the greenhouse gas emissions and ... giving people clear insight into how that money is being invested."

Ontario will cap emission allowances at roughly 142 million metric tonnes per year in 2017, and the cap is expected to decline 4.17 per cent each year to 2020, when the Liberals hope to have achieved a 15-per-cent reduction in greenhouse gas emissions over 1990 levels.