The Ontario Emissions Performance Standards (EPS), a program ensuring that polluters are accountable for greenhouse gas emissions, is expected to come into effect starting January 1 2022. This program uses “emissions performance standards” to determine a limit of greenhouse gas (GHG) emissions that industrial facilities are required to meet each year. Emitters will have to reduce their emissions, otherwise, they will have to pay a carbon price for exceeding GHG limits. The Ontario government has suggested that these standards will become stricter every year and that the carbon price is expected to increase annually.
Background
Under the Green Gas Pollution Pricing Act (GGPPA), the federal carbon pollution pricing system has two parts:
- a regulatory charge on fuel (federal fuel charge)
- a regulatory trading system for industry – the federal Output-Based Pricing System (OBPS)
The federal output-based pricing system (OBPS) is designed to ensure there is a price incentive for industrial emitters to reduce their greenhouse gas emissions and spur innovation while maintaining competitiveness and protecting against “carbon leakage”. Currently, Ontario is subject to both the Fuel Charge and the Federal OBPS.
The Ontario Emissions Performance Standards (EPS)
This program was created under the greenhouse gas emissions performance standards(O. Reg. 241/19), which came into effect on July 4, 2019. As previously stated, it intends to encourage the industrial sector to reduce greenhouse gas emissions, maintain competitiveness of Ontario businesses, and minimize carbon leakage.
On September 20, 2020, the Ontario EPS program was accepted by the Government of Canada as an alternative for the federal output-based pricing system (OBPS). This suggests that Ontario industrial emitters, which are currently subject to the federal output-based pricing system, will have to transition into the EPS program starting January 1 2022. Therefore, both the EPS and the regulatory Fuel Charge systems will be applicable to Ontario industrial facilities after this date.
The Ontario government has stated that they will work with the federal government to ensure a “smooth transition” for industry to the EPS program. The compliance obligations will continue to apply under the previous OBPS program for emissions occurring between 2019, 2020 and 2021.
Participation in the EPS program
You are required by law to register your facility in the EPS program if it meets the following criteria under section 2 of O. Reg. 241/19:
- the owner or operator of the facility was required to report the facility’s greenhouse gas emissions for 2014 or for any subsequent year
- the facility reported 50,000 tonnes or more of CO2e emissions in one or more reporting year from 2014 onward
- the primary activity at the facility is an industrial activity listed in paragraphs 1 to 38 of Schedule 2 of O. Reg. 241/19 or the owner or operator of the facility has registered the facility under Part II of the Greenhouse Gas Pollution Pricing Act (Canada)
A facility may opt-in if it meets all the following criteria undersection 4 of O. Reg.241/19>
- the owner or operator of the facility that reported the facility’s greenhouse gas emissions for 2014 or for any subsequent year
- the facility reported between 10,000 and 50,000 tonnes ofCO2 emissions in one or more reporting year from 2014 onward
- an activity at the facility is an industrial activity listed in Schedule 2 of O. Reg.241/19
- the owner or operator of the facility has registered the facility under Part II of the Greenhouse Gas Pollution Pricing Act (Canada)
GHG emissions limits and reporting
A facility regulated by the EPS program will pay a carbon price on the GHG emissions exceeding the limit set by the Ontario government. Certain types of businesses and industrial facilities are required to report and verify their greenhouse gas (GHG
You can learn the rules, guidelines, and how to report greenhouse gas emissions through “the annual GHG reports and verification thresholds” provided by the Ontario government at:
https://www.ontario.ca/page/report-greenhouse-gas-ghg-emissions.
All establishments that engage in specific GHG activity surpassing the limit, are required to give a report. This does not only apply to those facilities regulated by the EPS program.
Important information
If you would like to know more about the EPS current developments and its compliance obligations, please consider the following information:
Information on EPS registration processes can be found at:
https://www.ontario.ca/page/emissions-performance-standards-program
Proposed amendments to support the transition and implementation of the Ontario EPS program can be found at:
https://ero.ontario.ca/notice/019-3719
Further information about the Output-Based Pricing System can be found at:
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