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The public consultation period for the Ontario government’s proposed greenhouse gas (“GHG”) emission performance standards (“EPS”) ends on March 29, 2019. 

The EPS proposal is the government’s replacement for the cap and trade regime under the Climate Change Mitigation and Low-carbon Economy Act, 2016, S.O. 2016, c. 7, which was repealed on November 14, 2018. It is also intended as an alternative to the federal government’s regulation of GHG emission by the electricity and industrial sectors under the Greenhouse Gas Pollution Pricing Act (S.C. 2018, c. 12, s. 186), which the Ontario government is challenging in court.

As set-out in the government’s consultation document, Making Polluters Accountable: Industrial Emission Performance Standards, the government is proposing a regulatory regime that would establish GHG emission performance standards for the same industrial sectors currently covered by the federal regime. These include, among others: cement, chemical, electricity generation, natural gas liquids, metal tubes and steel, pulp and paper, and vehicle manufacturing. 

GHG Performance Standards

The GHG performance standards would apply to facilities in these sectors that surpass a GHG emissions threshold, with the government consulting on whether this threshold should be set at 25,000 or 50,000 tonnes of CO2e / year.

The GHG performance standards may be established on a sector-wide basis or facility-specific basis depending on how many facilities there are in the sector and whether it is possible to establish an average GHG emission for each unit of production.

Compliance Units

Regulated facilities that operate below the applicable GHG performance standard will earn “compliance units” that they can bank to off-set future GHG emissions or sell to other regulated facilities.

Regulated facilities that cannot meet their performance standards can purchase “compliance units” either from other regulated facilities or directly from the government. Government provided compliance units” are proposed to cost $20 per tonne in 2019 but to and increase by $10 per year up to a maximum of $50 per tonne in 2022. The proposal is for the payments to the government for “compliance units” to go into a fund that would support efforts to further GHG emission reductions on an industry-wide scale.

Environmental Registry Ontario aims to implement the EPS by the summer of 2019, to cover emissions starting January 1, 2019. Comments on the EPS proposal can be submitted through the Environmental Registry until March 29, 2019.

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