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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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Ontario Proposing Legislative Changes to Support Carbon Storage

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The Ontario Ministry of Northern Development, Mines, Natural Resources and Forestry (the Ministry) is seeking stakeholder feedback on proposed legislative changes to improve regulatory clarity and remove prohibitions on granting authorizations to use Crown land for carbon capture and storage (CCS) activities. The Ministry has also released a discussion paper on carbon storage, providing background on CCS and potential suitable sites in Ontario. This bulletin briefly summarizes the key changes:   Amendments to the Oil, Gas and Salt Resources Act   Proposed Amendments to the Oil, Gas and Salt Resources Act include: narrowing the prohibitions on the injection of carbon dioxide so that, going forward, the prohibition would no longer apply to potential carbon storage projects related to activities in wells regulated under the act other than for the purpose of carbon sequestration, when used in association with a project to enhance the recovery of oil or gas; adding the ability for the Ministry to enter into agreements with companies that want to use wells to explore, test, pilot or demonstrate new technologies (such as CCS) in relation to wells used for oil, gas, solution-mined salt as well as underground storage resources subject to Indigenous consultation requirements; and enhancing provisions for corporate accountability and allowing for the issuance of orders to prevent risks to the public or environment. Amendments to the Mining Act   Proposed changes to the Mining Act would allow the Ministry to grant authorizations to use Crown land for carbon storage activities.   Purpose   The Ministry notes that the proposed legislative amendments seek to provide greater regulatory clarity and support new energy concepts and technologies including CCS, as CCS is not currently subject to the provisions of the Oil, Gas and Salt Resources Act framework. The Ministry indicated that entering into agreements with CCS project proponents at the pilot and demonstration stage will provide valuable knowledge, learning,…

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Ontario Pursuing Clean Energy Credit Registry

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Ontario’s Ministry of Energy (the Ministry) this week announced its intention to develop a new voluntary clean energy credit registry (CEC) registry. The Ministry has directed Ontario’s Independent Electricity System Operator (IESO) to research and report on the design of a provincial CEC registry by July 4, 2022. The Ministry also indicated that it intends to consider the IESO report and stakeholder feedback before implementing the CEC registry by January 2023.   The Ministry stated that the CEC Registry will assist businesses operating in Ontario to meet corporate environmental and sustainability goals. The voluntary CECs would represent 1 MWh of clean electricity generated from one or multiple non-emitting sources such as solar, wind, bioenergy, hydroelectric and nuclear. Purchasers will be allowed to purchase and retire the voluntary CECs to meet corporate and individual goals and demonstrate that their electricity is generated from non-emitting sources.  Revenue from the sale of CECs could (i) be returned to Ontario ratepayers to lower the cost of electricity and/or (ii) support future clean energy generation projects. The proposed CEC registry is intended to assist businesses to reduce emissions and meet the climate targets of the Made-in-Ontario Environment Plan, Ontario’s climate and environment plan.   The CEC registry would match similar voluntary registries in Ohio, Pennsylvania, Illinois, Indiana, Wisconsin, and New England For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.

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Ontario Introduces Changes to OEB Act and Electricity Act

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The provincial government last week introduced Bill 13, Supporting People and Businesses Act, 2021, which includes legislative amendments to the Ontario Energy Board Act (OEB Act) and the Electricity Act.    Changes to the OEB Act include: removing the upper limit on the number of commissioners and providing that the Labour Relations Act does not apply to commissioners; and providing for a single process for ministerial review of certain by-laws made by the board of directors of the OEB. Changes to the Electricity Act include: creating a two-year limitation period that applies to certain payments, adjustments, and amounts settled by the IESO; and replacing current administrative penalties in Part VIII of the Act (which provides for the Electrical Safety Authority (ESA)) and empowering the ESA to order a person to pay an administrative penalty if the person has contravened a prescribed provision of Part VIII or the regulations made under it; certain restrictions, limitations or conditions of a prescribed authorization; or a prescribed order of the ESA. For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.

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IESO Releases 2021 Annual Acquisition Report

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Ontario’s Independent Electricity System Operator (IESO) earlier this week released its 2021 Annual Acquisition Report (the Report) providing details on  the province’s future reliability needs and how to address them. The Report sets out an approach to address these needs over three planning horizons: operations planning, near-term planning, and long-term planning. The Report is anticipated to lead to demand reductions and increased procurement of lower-carbon power. This bulletin outlines key highlights of the Report:   Understanding Ontario’s Reliability Needs Demand side uncertainties. Energy consumption is predicted to increase 1 percent each year until 2040. This prediction may be affected by the pace of economic recovery from the COVID-19 pandemic, demographic changes, changes in government policy, future energy management initiatives, and increasing electrification. Energy management. The Report indicates that the Industrial Conservation Initiative program is forecasted to reduce demand by 1300 MW with an additional 2.8 TWh and 450 MW of energy and demand savings from the 2021-2024 Conservation and Demand Management (CDM) Framework. Planned Actions to Ensure Resource Adequacy Flow East Towards Toronto (FETT). With the upcoming planned nuclear retirements and recommissioning, the supply capacity east of the FETT is expected to decline considerably and additional supply will be required as early as 2023. As a result, IESO is recommending upgrading the transmission line between North Oakville and Pearson Airport by 2026, reducing capacity needs by 2000 MW. To meet the increased demand, IESO is negotiating a transitional contract for the Lennox Generating Station which ends in April 2029. The Lennox Generating Station provides large-scale and flexible supply from a dual gas and oil generation facility. West of London. Electricity demand in Windsor-Essex and Chatham-Kent is expected to grow from 500 to 2300 MW by 2035. As a result, IESO is recommending development of new transmission infrastructure from Lambton to Chatham and Chatham to Lakeshore, which will require addressing…

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