Environment and Climate Change Canada (ECCC) has published proposed amendments to the Output-Based Pricing System (OBPS) Regulations (the Regulations) under Part 2 of the federal Greenhouse Gas Pollution Pricing Act (GGPPA) (read our earlier bulletin on the GGPPA here). The proposed amendments seek to maintain the incentive to reduce greenhouse gas (GHG) emissions in the OBPS and increase the accuracy of the values output and GHG emissions and emissions limits calculated by covered facilities. In addition, the proposed amendments are an attempt to clarify certain provisions of the Regulations to ensure compliance is consistent with the policy intent of the OBPS and GGPPA. This bulletin briefly summarizes the proposed amendments:
Rules relating to surplus credits and payments. The proposed amendments provide new rules for when a province is removed from the OBPS including:
- increasing the circumstances that allows the Minister to suspend surplus credits;
- limiting the use of surplus credits by not allowing them to be used to meet a compensation obligation -for a compliance period during which a province is not participating in the OBPS; and
- providing for the lifting of the suspension of surplus credits, provided they are still eligible for use, when they are used to meet a compensation obligation for a compliance period during which a province was part of the OBPS.
Rules relating to quantification and verification. The proposed amendments will:
- repeal the provisions related to improved precision in a covered facility’s assessment of GHG emissions and replace it with a requirement that the difference between a covered facility’s GHG emissions during a compliance period and its emissions limit during that same period be rounded to the nearest whole number;
- update emission factors used in the quantification of GHG emissions from fuel combustion by incorporating the emission factors from the 2020 version of Canada’s Greenhouse Gas Quantification Requirements under the GHG Reporting Program, and require on-site transportation emissions be quantified under the 2020 version;
- modify the Regulations to explain when and how CO2 emissions captured and permanently stored may be deducted from total GHG emissions; and
- add a provision limiting the number of verifications of annual reports that can be conducted by a single verification body to six annual reports with respect to the same covered facility within any nine year period.
Registration of and ceasing to be covered facility. The proposed amendments provide clarification as to the beginning of the first compliance period when a covered facility enters the OBPS in a compliance period that has already commenced as follows:
- if the person responsible for a covered facility is not already registered under Part 1 of the GGPPA, the first compliance period is on the effective date of registration under Part 1; or
- if the person responsible for a covered facility is already registered under Part 1 or is located in a jurisdiction where the federal fuel charge does not apply, the first compliance period begins on the date specified in the certificate issued under Part 2 of the GGPPA.
Further clarifications. The proposed amendments provide the following further clarifications:
- changing the name of the American National Standards Institute to “ANSI National Accreditation Board”;
- correcting errors in a formula applicable to industrial activities for which an output-based standard must be calculated;
- making a clarification to subsection 6(1) of the Regulations, which specifies when the Minister may cancel the designation of a covered facility; and
- ensuring that the English and French versions of the regulatory text align with each other.
For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.
