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ECCC Publishes Refrigeration Offset Protocol; Key Updates on Other Protocols

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Environment and Climate Change Canada (ECCC) has published the Reducing Greenhouse Gas Emissions from Refrigeration Systems, Version 1.0 protocol (the Refrigeration Protocol). ECCC also published a new version of the Landfill Methane Recovery and Destruction, Version 1.1 protocol which was first published on June 8, 2022. The Refrigeration Protocol supports Canada’s commitments to phase down hydrofluorocarbons (HFCs) under the Kigali Amendment to the Montreal Protocol, wherein developed countries agreed to gradually phase down HFCs starting in 2019 to 15% of calculated baseline levels by 2036. This bulletin briefly summarizes the Refrigeration Protocol and provides important updates on protocol development under Canada’s Greenhouse Gas (GHG) Offset Credit System. The Refrigeration Protocol Eligible projects under the Refrigeration Protocol may register in Canada’s GHG Offset Credit System if the following conditions are met: Location. The project must be located in a province or territory in Canada. Additionality. GHG emission reductions generated by the project must not already be incentivized by carbon pricing and must not occur as a result of federal, provincial or territorial regulations or where a project proponent is required to retrofit or replace a pre-existing refrigeration system or its refrigerant. Baseline conditions. The system used in the baseline scenario must be either a stand-alone medium- or low-temperature refrigeration system, centralized refrigeration system, condensing unit, chiller, commercial air conditioning system or a heat pump. Pre-existing refrigeration systems must be operating for a minimum of three years prior to the project start date. Eligible project activities. The proponent can retrofit a pre-existing refrigeration system to use an eligible refrigerant, install a new refrigeration system containing an eligible refrigerant, and if applicable, destroy HFCs contained in refrigerant taken out of a pre-existing refrigeration system.   Eligible refrigerant. The refrigerant used in the project scenario must have a global warming potential (GWP) lower than values provided…

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Canada Announces Publication of Final Clean Fuel Regulations

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Canada’s Minister of Environment and Climate Change has announced the publication of the final Clean Fuel Regulations (CFR) to replace the federal Renewable Fuels Regulation (RFR). The final CFR was approved by Cabinet on June 20, which will now also be the date that early crediting commences. The official version of the CFR will be published in Canada Gazette Part II on July 6. The federal government intends for the CFR to reduce Canada’s greenhouse gas (GHG) emissions by up to 26.6 million tCO2e by 2030. An unofficial version of the Regulatory Impact Analysis Statement has also been released. This bulletin briefly highlights key details and recent changes to the CFR, which repeal and replace the RFR while retaining the minimum volumetric requirements of at least 5% low CI fuel content in gasoline and 2% low CI fuel content in diesel fuel and light fuel oil. Compliance requirements. The CFR will require gasoline and diesel primary suppliers (producers and importers) to reduce the carbon intensity (CI) of the gasoline and diesel they produce in, and import into, Canada from 2016 CI levels by 3.5 gCO2e/MJ in 2023, increasing at a rate of 1.5 gCO2e/MJ to 14 gCO2e/MJ in 2030 (up from 12 gCO2e/MJ in prior iterations). The annual CI reduction requirements that primary suppliers must meet for the gasoline and diesel fuels they supply to Canada is the difference between a baseline CI value and a CI limit for gasoline and diesel. Compliance requirements under the CFR will come into effect on July 1, 2023, with the first compliance review in December 2023.  Credit market. The CFR will also establish a credit market providing for three main categories of credit-creating action: Actions that reduce the CI of the fossil fuel throughout its lifecycle through GHG reduction projects (e.g., carbon capture and storage); Supplying low-carbon…

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Canada Officially Launches GHG Offset Credit System

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Environment and Climate Change Canada (ECCC) today announced the launch of Canada’s Greenhouse Gas Offset Credit System, with the publication of the final regulations in Canada Gazette II. As part of the announcement, ECCC also announced that municipalities and other landfill operators will now be able to generate offset credits under the finalized Landfill Methane Recovery and Destruction protocol (see our earlier bulletins here and here) for recovering landfill gas from their operations and either destroying it or repurposing it into energy with technologies such as flares, boilers, turbines, and engines. ECCC is currently developing the following federal offset protocols: Reducing GHG Emissions from Refrigeration Systems; Improved Forest Management; Enhanced Soil Organic Carbon; and Livestock Feed Management.  ECCC has also indicated that over the summer it will begin development of a Direct Air Carbon Capture and Sequestration protocol, after which it will start work on the following new protocols: Improved Forest Management on Public Lands; Bioenergy Carbon Capture and Sequestration; Livestock Manure Management; and Anerobic Digestion. ECCC also announced that it is looking for interested individuals to provide input as external technical experts and assist with the development of the Direct Air Carbon Capture and Sequestration protocol. Interested individuals are invited to visit the GHG Offset Credit System website for more information on how to submit their candidacy packages by July 31, 2022. For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.

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Budget 2022: Key climate, energy, and Indigenous highlights

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Deputy Prime Minister and Minister of Finance Chrystia Freeland yesterday released Budget 2022: A Plan to Grow Our Economy and Make Life More Affordable (Budget 2022). This bulletin outlines key climate, energy, and Indigenous highlights from Budget 2022, part of total new spending of $31.2B, which includes: A proposal to establish the Canada Growth Fund (initial investment of $15B over five years), directly targeted at reducing emissions and enabling the transition to a low-carbon economy. Confirmation of the government’s intention to establish a refundable investment tax credit for carbon capture, utilization and storage (CCUS) projects to the extent that they permanently store captured CO2 through an eligible use. Plans to engage with experts on establishing an investment tax credit of up to 30 per cent, focused on net-zero technologies, battery storage solutions, and clean hydrogen. Support for the co-development of an Indigenous Climate Leadership Agenda to support self-determined action in addressing Indigenous Peoples’ climate priorities. Climate Budget 2022 includes new and proposed funding supporting important climate action, as follows: Canada Growth Fund. Budget 2022 proposes establishing the Canada Growth Fund, with an initial $15B investment over the next five years and the aim of attracting substantial private sector investment supporting the following economic policy goals: reduce emissions and contribute to achieving Canada’s climate goals; diversify the economy and bolster exports by investing in the growth of low-carbon industries and new technologies across new and traditional sectors of Canada’s industrial base; and support the restructuring of critical supply chains in areas important to Canada’s future prosperity—including our natural resources sector. Clean technology. Budget 2022 proposes the following new clean technology funding and investments: engage with experts to establish an investment tax credit of up to 30 per cent, focused on net-zero technologies, battery storage solutions, and clean hydrogen; provide $2.2B over…

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ECCC Consulting on Developing a Clean Electricity Standard

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Environment and Climate Change Canada (ECCC) today released a discussion paper, “A Clean Electricity Standard in support of a net-zero electricity sector” (the Discussion Paper), as part of its first steps in developing and consulting on a Clean Electricity Standard (CES) under the Canadian Environmental Protection Act, 1999. This bulletin summarizes key details of the Discussion Paper and provides important information on ECCC’s consultation on developing a CES.   Purpose. The Discussion Paper indicates that its purpose is to support the government’s intention to introduce regulations to achieve a net-zero electricity system by 2035 and invite comments regarding the scope and design of the CES. The Discussion Paper notes that Canada’s electricity system is currently 82% non-emitting but remains Canada’s 4th largest source of emissions, accounting for 8.4% of total greenhouse gas (GHG) emissions in 2019.   Proposed CES Regulations. The Discussion Paper notes that carbon pricing will be insufficient to ensure that the electricity sector achieves net-zero emissions by 2035 or likely even by 2050. Therefore, a nation-wide CES regulation will complement carbon pricing by requiring the phase-out of all conventional fossil fuel electricity generation and incentivizing fuel switching in other sectors. The scope and design of the CES regulations will also need to provide enough compliance flexibility to allow for the use of natural gas for emergency events, back-up power to complement renewables, and supplying power during seasonal peaks of demand. The proposed CES regulations may, among other things: apply to all sources of emitting electricity generation that sell to the grid; transition the electricity sector to net-zero by 2035 while providing increased supply of electricity to support electrification and the role of available technologies in the provision of clean power to Canadians; be stringent enough to achieve its objectives while including compliance flexibility, such as robust GHG offsets, and allow for the…

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