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February 2024

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Ontario Proposes Significant Amendments to Ontario Energy Board Act

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The Ontario Government recently introduced the Keeping Ontario Energy Costs Down Act, 2024 (the Act). If passed, the Act will provide the government with significant new authority to influence or direct fundamental questions in future leave to construct applications that come before the Ontario Energy Board (the OEB or Board). In addition, the Act would reverse aspects of a December 21, 2023, decision by the Ontario Energy Board  relating to Enbridge Gas Inc.’s (Enbridge) application for approval of its natural gas rates for the period starting January 1, 2024 (the Enbridge Decision). This bulletin provides key details of the Enbridge Decision and outlines the significant proposed amendments of the Act. The Enbridge Decision, which represents the focal point for much of the government’s statements concerning the Act, arises from a complex regulatory proceeding lasting more than one year, involving approximately one month of hearings and thousands of pages of evidence, and implicating the participation of large numbers of intervenors and expert witnesses. The aspect of the Enbridge Decision that has attracted the most public attention was the OEB’s decision to eliminate Enbridge’s ability to recover the cost of new customer connections to the existing gas network over a 40-year period (i.e., revenue or amortization horizon), meaning those costs would now be recovered upfront. These costs are estimated at approximately $4,412 (weighted average of new construction and existing homes in the “Enbridge Gas Distribution” rate zone). The majority decision’s rationale was based on the need to facilitate an informed choice concerning the full lifetime cost of available energy options and to completely mitigate the stranded asset cost risk. The existing 40-year recovery period attracted criticism from certain parties intervening in the proceedings on the basis that, among others, it does not adequately account for the risk that the ongoing energy transition may result in natural gas assets being replaced over a shorter period, which…

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Council of EU and European Parliament Agree Deal on Carbon Removals Certification Framework

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The Council of the EU (the Council) and the European Parliament reached a provisional political agreement (the Agreement) earlier this week on a regulation to establish the Carbon Removals Certification Framework (CRCF), the first EU-level certification framework for permanent carbon removals. The CRCF is a voluntary framework intended to facilitate deployment of high-quality carbon removal and soil emission reduction activities in the EU, in support of net-zero by 2050. The Agreement follows the European Commission’s (the Commission’s) regulatory proposal for the CRCF (released December 2, 2022) and the Council’s mandate for negotiations with the European Parliament (released November 17, 2023). The European Parliament and Council now need to formally approve the Agreement. Once this process is completed, the new legislation will be published in the Official Journal and enter into force. We anticipate that the CRCF will facilitate integration of carbon dioxide removals into the EU’s broader package of climate policies and eventually allow for market-based trading of CRCF-certified units. CRCF certification may also serve as an integrity benchmark for CDRs developed for the voluntary carbon market. This bulletin briefly summarizes the main elements of the Agreement. Scope of activities. The CRCF will use an “open definition” of carbon removals, in line with the IPCC and which only covers atmospheric or biogenic carbon removals. It will cover the following carbon removal and emission reduction activities and differentiate between four corresponding unit types: permanent carbon removal (storing atmospheric or biogenic carbon for several centuries); temporary carbon storage in long-lasting products (such as wood-based construction products) of a duration of at least 35 years and that can be monitored on-site during the entire monitoring period; temporary carbon storage from carbon farming (e.g., restoring forests and soil, wetland management, seagrass meadows) of a duration of at least 5 years; and soil emission reduction (from…

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Ontario to Introduce Legislation Requiring a Referendum on New Carbon Pricing

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Ontario Premier Doug Ford yesterday announced that the government intends to introduce legislation next week that would require a referendum before any new provincial carbon pricing system could be implemented in the province. The measure is expected to be part of new legislation, the “Get It Done Act” (the Act), which is set to be tabled in the upcoming legislative session starting February 20, 2024. A carbon pricing referendum would only apply to proposed provincial measures and not the federal backstop carbon pricing system under the Greenhouse Gas Pollution Pricing Act (GGPPA) that went into effect in Ontario after the provincial government cancelled Ontario’s cap-and-trade system. Premier Ford noted that the aim of the Act is to give voters a direct say over any new provincial carbon tax, cap-and-trade system, or other carbon pricing program, and emphasized the importance of keeping costs low for residents and businesses. The Act is expected to include a host of measures that build on the government’s commitments to streamline approvals for major infrastructure projects and housing, lower costs for people and businesses, and support economic growth. Ontario’s Finance Minister Peter Bethlenfalvy (the Minister) stated that the government made a promise to fight the federal fuel charge (see our bulletin on the Supreme Court of Canada’s decision upholding the constitutionality of the GGPPA here) and that it would continue to lead by example by “giving Ontarians certainty that carbon pricing on the backs of taxpayers is not the way forward.” The Minister suggested that “[a]ny new provincial carbon tax is unacceptable for Ontario residents who are seeing their hard-earned dollars stretched further than ever.”  The provincial government also called on the federal government to expand the temporary pause on the application of the federal fuel charge for home heating or to eliminate the federal carbon fuel charge entirely.   For further information or to discuss the contents…

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