A more detailed look into the made-in-Ontario Emissions Standards Program

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The Ministry of Environment, Conservation and Parks recently announced the made-in-Ontario Emissions Performance Standards (EPS) Program – an Ontario-specific approach to regulate greenhouse gas emissions (GHG), while also focusing on  economic growth. The made-in-Ontario EPS Program will be serving as the alternative to the federal output-based pricing system (OBPS) for regulating GHG emissions. 

In order to gain a better understanding of the program, Imprint reached out to Gary Wheeler, from the Communications Branch at the Ministry of Environment, Conservation and Parks. 

Tell us about the Made-in-Ontario Emissions Performance Standard (EPS) Program? 

The emissions performance standards program is one of our made-in-Ontario Environment Plan commitments and is a key program in making polluters accountable for their greenhouse gas emissions. 

The program regulates greenhouse gas emissions from large industrial facilities, and it sets standards for lowering emissions that facilities are required to meet. If an industry does not meet the standard, it will have to pay. Industrial facilities in Ontario have everything to gain by reducing their emissions through innovation. The more they reduce their emissions, the less they have to pay for their pollution. In fact, they can get credits for any reductions that surpass the standard, which they can then sell or trade to other emitters in the program. 

What are some of the major distinctions of the EPS Program from the federal output-based pricing system?

The program is Ontario’s proposed alternative to the federally imposed output-based pricing system (OBPS). The EPS program has been explicitly designed to align with Canada’s emissions reduction target, on price and on covered sectors, but unlike the OBPS, the EPS program phases-in stringency over time – saving Ontario industries the initial shock that is present in the OBPS and giving industry more time to meet its obligations.

Our emissions performance standards program recognizes the unique circumstances of Ontario’s economy and considers specific industry and facility conditions while allowing for economic growth. 

Ontario’s approach does not enforce a blanket cap on emissions across Ontario.. These regulations include a tailored approach appropriate to the specific regulated industry.

It helps us achieve emission reductions from big polluters and meet our share of Canada’s 2030 emissions reduction target without driving away business and job creators.

Environment and Climate Change Canada determined through its own assessment that the Government of Ontario’s EPS program regulation meets the federal benchmark stringency requirements. The made-in-Ontario program is an integral part of our province’s plan to fight climate change. 

When will the made-in-Ontario EPS program come into effect?

Ontario’s Emissions Performance standards regulation came into effect on July 4, 2019. Currently, only the registration and record keeping related provisions apply.

Other key provisions (e.g., performance standards, sales of compliance units, compliance obligations) do not currently apply until Ontario is removed from Part 2 of Schedule 1 of the federal Greenhouse Gas Pollution Pricing Act (GGPPA). The federal government’s recent acceptance of our emissions performance standards program brings us a step closer to that removal. Ontario is working with the federal government to ensure a smooth transition for industry and to ensure there is clear understanding around compliance requirements. 

This is a priority for Ontario, and we will be actively working with the federal government to secure the EPS program as quickly as possible to provide certainty to Ontario industry.

The press release mentions “If an industry does not meet the standard, it will have to pay.” What would the standard annual emission rate be for industries under the Made-in-Ontario EPS Program. Would the standard be the same as federal government’s standard emission rate of 50,000 tonnes/year?

The program applies to large industrial facilities that have emitted 50,000 tonnes or more of carbon dioxide equivalent per year, in any year starting from 2014 onward. It includes facilities that are involved in making steel, cement, refined petroleum products, etc. 

Facilities that have emitted between 10,000 and 50,000 tonnes of carbon dioxide equivalent per year in any year starting from 2014 onward may choose to opt into the program. This could include food processors, mining operations, and wood product manufacturers.

We are regulating the same sectors that are covered by the federal OBPS to simplify reporting and compliance and to provide clarity for Ontario businesses.. Each sector has a tailored approach appropriate to the specific sector.

Ontario’s EPS program sets in law annual requirements for these companies to lower their greenhouse gas emissions. If an industrial facility does not meet the standard, it must pay a compliance fee. These regulatory charges start at $20 per tonne of carbon dioxide equivalent for 2019 emissions and increase by $10 per tonne per year up to $50 per tonne for 2022 emissions – the same price as the federal program.  Ontario’s regulation has those price increases written into it. Transparency in the price escalation is a critical design feature because it signals to industry a certainty around the price they will face, and in doing so promotes innovation and early action.

Does the incentive intend to positively impact the Ontario economy and promote growth as means to recover from impacts of COVID-19? 

Money collected by the government for compliance with the program will be reinvested into projects that reduce greenhouse gas emissions.

Our government recognizes the impact the COVID-19 outbreak has had on industry and is taking necessary steps to protect the health of all Ontarians while ensuring goods and services continue to be delivered.

To provide temporary relief to businesses, we extended the deadline for greenhouse gas reporting from June 1 to July 31, 2020 to align with the federal government’s recent extension and to maintain reporting harmonization.  We also extended timelines for businesses to submit production data and verification statements to October 1, 2020. In order to support physical distancing measures, Ontario also temporarily delayed requirements for third-party verifiers to conduct site visits. Regulated businesses are still expected to comply with reporting requirements and adhere to Ontario’s strong protection framework for the environment and human health.

The interview has been edited. 

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