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Ontario Launches Emissions Performance Program

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Ontario’s Ministry of the Environment, Conservation and Parks (the Ministry) recently launched the Emissions Performance Program (EPP). The EPP takes proceeds collected from the Emissions Performance Standards (EPS) Program (see our earlier bulletin here) and allows large emitters to apply for funding to support greenhouse gas (GHG) reduction projects at eligible industrial facilities. The EPP aims to support covered industrial facilities to remain competitive and contribute to economic growth in Ontario. This bulletin briefly summarizes key details of the EPP. Overview. The EPP is a non-competitive program funded by compliance payments collected through the EPS. The EPP will fund capital and study-based projects. The available funds are derived from revenue collected through the purchase of compliance instruments, known as Excess Emissions Units (EEUs) under the EPS, by EPS participants to meet their compliance obligations. EPS participants eligible for the EPP can apply for a funding amount notionally equivalent to the amount they paid for EEUs. Eligible industrial facilities have been sent notification emails from the Ministry outlining their ‘notional allocation amount’ which is the maximum amount of funding they are eligible to receive. Eligibility and eligible projects. Facilities eligible for the EPP: (i) are registered in the EPS Program; (ii) have purchased EEUs; and (iii) do not generate electricity as their primary industrial activity. Examples of project activities eligible for funding include, among others: stationary equipment retrofits for energy efficiency and fuel switching; mobile equipment retrofits for energy efficiency and fuel switching; building envelope upgrades (insulation, windows, doors); heat recovery; industrial process changes; carbon capture and storage; and clean electricity and low-carbon fuel production for own use. Application for funds. Eligible applicants may apply for funding by submitting a project proposal through the Transfer Payment Ontario (TPON) portal, where EPP materials are available to organizations with a TPON account. Eligible…

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Ontario Proposes Changes to Emissions Performance Standards Program

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Ontario’s Ministry of the Environment, Conservation and Parks (the Ministry) has launched public consultations on proposed regulatory amendments for the Emissions Performance Standards (EPS) program. The proposed changes are meant to ensure that the EPS program meets the updated benchmark under the Greenhouse Gas Pollution Pricing Act (the Act) set by the federal government for 2023-2030 (see our earlier bulletin on the Ministry’s prior EPS consultation here) as the current EPS program only applies to 2022. This bulletin briefly summarizes key proposed changes and provides important information on stakeholder participation in the consultation. Carbon Price. The Ministry is proposing to align the EPS program and the price of excess emissions units (EEUs) with the minimum carbon price set out in the updated federal benchmark ($65 for the 2023 compliance period rising to $170 for the 2030 compliance period). Program Scope. The Ministry is proposing to add the following sectors represented by the North American Industrial Classification System (NAICS) to the list of covered industrial activities based on a preliminary assessment of carbon leakage and competitiveness: Fruit and vegetable preserving and specialty food manufacturing; Meat product manufacturing; Beverage manufacturing; Converted paper product manufacturing; Plastic product manufacturing; Rubber product manufacturing; Forging and stamping; Spring and wire product manufacturing; Machine shops, turned product, and screw, nut, and bolt manufacturing; Engine, turbine and power transmission equipment manufacturing; Other general-purpose machinery manufacturing; Aerospace product and parts manufacturing; Office furniture (including fixtures) manufacturing; Other miscellaneous manufacturing; and Dairy product manufacturing. Registration and Cessation of Coverage. The Ministry is proposing to allow EPS facilities that expect to emit at least 10,000 tCO2e/year within three years following a major retrofit or expansion to apply to register in the EPS program as soon as production has started to increase. The Ministry is also proposing to facilitate a pathway for…

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Ontario Provides EPS Principles for Meeting Federal Benchmark and Releases New Emissions Reduction Modelling

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The Ontario Ministry of the Environment, Conservation and Parks (the Ministry) has posted a bulletin (the Bulletin) providing principles to guide policy development and future consultations for Ontario’s Emissions Performance Standards (EPS) program to meet the updated federal benchmark for 2023-2030 (read our earlier bulletins on the EPS here and here). The Ministry also released new modelling demonstrating how Ontario is forecasted to meet its GHG  emission reduction target of 30% below 2005 levels. This bulletin briefly summarizes key information in the Bulletin and the emissions scenario modelling. Proposed Principles. The Bulletin notes that the federal government, in its Update to the Pan-Canadian Approach to Carbon Pollution Pricing 2023-2030, set out new and more stringent benchmark requirements ($65/tCO2e in 2023, rising $15/year to $170 in 2030) that all carbon pricing systems, including the EPS program, must meet under the Greenhouse Gas Pollution Pricing Act. To meet the more stringent benchmark, the Ministry is proposing to design the next phase of the EPS program using the following guiding principles: provide continuity and predictability for Ontario businesses; incent GHG emissions reductions, which will help Ontario to meet its target to reduce GHG emissions by 30% below 2005 levels by 2030; minimize the risk for carbon leakage (the risk of production leaving the province for other jurisdictions with less stringent climate policies), taking into account competitiveness impacts to Ontario industry; ensure the program continues to be fair, cost-effective, and flexible to the needs and circumstances of Ontario; and minimize regulatory burden. Emissions Reduction Modelling. New modelling released as part of the Bulletin provides updated forecasting of provincial emissions out to 2030. The modelling shows that Ontario’s emissions are forecasted to be 143.7 MT CO2e in 2030, slightly lower than Ontario’s 144 MT target for 2030. The Ministry notes, and as shown in the graph…

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Government of Ontario Releases Emissions Performance Standard Regulations

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The Government of Ontario has released O. Reg. 241/19 Greenhouse Gas Emissions Performance Standards (the Regulation), which came into effect on July 4, 2019 following an unexpected process surrounding the release of the Regulation. The Province published a regulatory proposal for industrial emission performance standards (EPS) in February 2019. Compliance. The first compliance period under the Regulation would begin on January 1 in the year in which Ontario is removed from the list of provinces to which the federal Output-Based Pricing System applies. The Regulation provides that: Compliance instruments include excess emissions units (EEUs) and emissions performance units (EPUs), each of which are subject to eligibility requirements if they are used to satisfy a facility’s compliance obligation. EEUs must be distributed to facilities beginning in the first year after the first compliance period. The cost of each EEU is set at $20 in 2020, $30 in 2021, $40 in 2022, and $50 in 2023. EPUs must be distributed in the year after a compliance period to facilities for which the verified total annual emissions limit for the compliance period is more than the verified verification amount for the compliance period (unless the Historical Facility Emissions Limit Standard is used). EPUs expire after five years. Eligible compliance instruments must generally be removed from a facility’s account at the end of a compliance period, with EEUs to be removed before any EPUs are removed. EPUs may be transferred between facilities’ accounts by agreement if notice is provided. Registration. The Regulation further provides for mandatory registration of facilities that report or have reported emissions of at least 50,000 tonnes of CO2e per year under current or prior regulations. Voluntary registration may be available for facilities that report or have reported emissions of at least 10,000 and less than 50,000 tonnes of CO2e per…

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