Government of Canada Announces Two New Consultations Related to Carbon Policy and Regulation

Proposed Amendments to the Output-Based Pricing System Regulation (OBPSR)

Proposed amendments to the OBPSR were published by the Carbon Markets Bureau of Environment and Climate Change Canada in the Canada Gazette, Part I, on June 5, 2021 for a 30-day comment period. These amendments are intended to improve implementation of the OBPSR and prepare the federal OBPS for transitions to provincial pricing systems when required. The proposed amendments include updates and clarifications of specific provisions of the OBPSR, notably those concerning surplus credits and quantification methods.

The amendments do not include changes related to the 2022 OBPSR Review, which will follow later this year.    

ECCC will be hosting a series of webinars later this month that will provide an overview of the new proposed amendments.

Comments related to the proposed amendments are due by July 5, 2020, and may be sent to ec.tarificationducarbonecarbonpricing.ec@canada.ca.

Finance Canada Launches Consultation on Carbon Capture, Utilization and Storage Tax Credit

Canada’s Department of Finance announced earlier this week the launch of consultations on an investment tax credit for Carbon Capture, Utilization and Storage (CCUS). The CCUS tax credit was a commitment originally made in Budget 2021.

Per the press release, the federal government intends for the new investment tax credit to be available for a broad range of CCUS applications across different industrial subsectors (e.g. concrete, plastics, fuels), including blue hydrogen projects and direct air capture projects, but not enhanced oil recovery projects. The government is seeking input from all industrial subsectors, recognizing that various subsectors face different challenges in adopting CCUS. The consultation will include key provincial governments, as part of efforts to encourage complementary measures for CCUS projects in their respective jurisdictions.

The CCUS investment tax credit will be available starting in 2022. On the same timeline, the government will also determine how comparable tax support could be provided to producers of green hydrogen.

Key questions for consideration

This consultation seeks input from stakeholders on the design of the investment tax credit for CCUS, including the rate of the incentive, to achieve the government’s goals.

The government is also requesting information about potential CCUS project proposals from varying industrial subsectors that could contribute to the government’s goal of reducing emissions by at least 15 megatonnes of CO2 annually.

Further information around the scope and consideration of the consultation and specific CCUS project proposal template can be found here.

Stakeholders are invited to provide comments on the government’s proposed approach by September 7, 2021. Comments can be sent to ccus-cusc@fin.gc.ca with the subject line “CCUS Consultation.”

Happy to help.

Sussex is here to help ensure that your perspectives and priorities are understood and considered by the Government of Canada during the consultation period and are reflected in the proposed OBPSR changes.

If you have questions, please reach out to the Sussex Federal or Environment teams.

Devin McCarthy, Vice President
dmccarthy@sussex-strategy.com

Robyn Gray, Vice President
rgray@sussex-strategy.com
‍
David Donovan, Director
ddonovan@sussex-strategy.com

Liam Daly, Senior Associate
ldaly@sussex-strategy.com
‍
Christina Marciano, Senior Associate
cmarciano@sussex-strategy.com

Roberto Chavez, Associate
rchavez@sussex-strategy.com