As Ontario continues its transition from a federally regulated Output-Based Pricing System (“OBPS”) for greenhouse gas emissions (“GHG”) to a provincial Emissions Performance Standards (“EPS”) program and pricing system, the Department of Environment, Conservation and Parks ( “MECP”) for comment Regulatory changes to the EPS program for the period 2023-2030. The EPS program regulates GHG emissions from large industrial plants in the province by setting emission limit values, which form the basis of those plants’ compliance obligations. The proposed changes to the EPS program for 2023-2030 can be commented on until October 10, 2022.
Most of the proposed changes are necessary for Ontario to meet benchmark requirements and carbon pricing set by the federal government. As we reported in our previous blog post, in March 2021 the Supreme Court of Canada upheld the federal government’s power to regulate greenhouse gas emissions nationwide. As a result, provincial GHG emissions pricing rules must meet benchmarks set by the federal government; Failure to meet such benchmarks would require a province to comply with federal pricing regulations.
The federal government has announced that the price of carbon across Canada should be at least $65 per tCO2e in 2023 and increase by $15 per year to $170 per tCO2e in 2030 Not Implementing measures that directly offset, reduce, or negate the price signal sent by the carbon price (such as per-unit usage) for all industrial assets must replace them with alternative performance standards. To meet these and other requirements, Ontario’s EPS system will need to change.
The Ontario Government is seeking feedback on the following components of the proposed EPS system changes:
- carbon price
- program scope
- Registration and termination of insurance cover
- emission standards
- Electricity generation and combined heat and power
- stringency factors
- other administrative and technical changes
- Carbon leakage and related competitiveness assessment
- public reporting
Interested parties should submit their comments before October 10thth Meeting.