Ontario Finalizes Regulatory Amendments to Support the Transition and Implementation of Ontario's Emissions Performance Standards Program

Earlier today, Ontario’s Ministry of the Environment, Conservation and Parks (MECP) posted two decisions to the Environmental Registry of Ontario pertaining to regulatory amendments that support the implementation of Ontario’s Emissions Performance Standards (EPS) program. The EPS program will regulate GHG emissions from large industrial facilities by setting the standards for lowering GHG emissions (emissions limits) that facilities are required to meet.

Currently, industrial emissions in Ontario are regulated by the federal government’s Output-Based Pricing System (OBPS). In September 2020, the federal government announced it had accepted Ontario’s EPS program as an alternative to the federal OBPS. Furthermore, on March 29, 2021 Canada informed Ontario of its intent to facilitate the transition from the federal OBPS to Ontario’s EPS on January 1, 2022.

As such, Ontario proposed a series of regulatory amendments to help facilitate this transition. Amendments were made to the following regulations and incorporated documents:

• Greenhouse Gas Emissions Performance Standards Regulation (O. Reg. 241/19 or the EPS Regulation) and the incorporated GHG Emissions Performance Standards and Methodology for the Determination of the Total Annual Emissions Limit (the Methodology)
• Greenhouse Gas Emissions: Quantification, Reporting and Verification regulation (O. Reg. 390/18 or the Reporting Regulation) and the incorporated Guideline for Quantification, Reporting and Verification of Greenhouse Gas Emissions (the Guideline)

Collectively, these changes will:

• Begin the new obligations and GHG emissions performance standards under the EPS program on January 1, 2022
• Align the scope of the EPS program with the federal OBPS
• Support the ability of registered facilities to maintain their exemption from the federal fuel charge
• Allow for partial year coverage of emissions for facilities that register part way in a year
• Add eight new sectors to the program
• Provide a three-year grace period for compliance obligations for most new facilities (excluding those where primary industrial activity is generating electricity using fossil fuel)
• Align the performance standard for the electricity sector with the federal output-based standard to avoid unnecessary administrative costs and maintain stability in the electricity market (370 CO2e/GWh)
• Clarify the application of the cogeneration standard to ensure facilities are applying it in a consistent manner that aligns with the 80% efficient cogeneration system policy

To learn more about the regulatory amendments, the outcome of public consultation, and the decision detail, please visit the ERO postings:

• Amendments to transition Ontario industrial facilities from the federal Output-Based Pricing System to Ontario’s Emissions Performance Standards program (ERO #019-2813)
• Amendments to support transition and implementation of Ontario’s Emissions Performance Standards program(ERO #019-3719)

In early 2022, the Government of Ontario intends to consult on a future proposal for the 2023-2030 period of the EPS program that aligns with the updated federal benchmark for provincial and territorial programs.

Happy to help.

The Sussex Environment Practice Group will be reviewing the amendments in greater detail and the implications for affected businesses. We’d be please to discuss this in greater detail upon request.

Robyn Gray, Principal and Environment Practice Group Lead
rgray@sussex-strategy.com

Christina Marciano, Senior Associate, Environment Practice Group
cmarciano@sussex-strategy.com

Devin McCarthy, Senior Vice President and Federal Practice Lead
dmcarthy@sussex-strategy.com