Regulation - LGIC

Amendments to Cap and Trade Program Regulation and Quantification, Reporting and Verification of Greenhouse Gas Emissions Regulation

Regulation Number(s):
Bill or Act:
Climate Change Mitigation and Low-Carbon Economy Act
Summary of Decision:
A decision has been made to proceed with amendments to the greenhouse gas cap and trade program, which include changes to the:

1.Cap and Trade Program Regulation (O. Reg. 144/16)
2.Methodology for Distribution of Ontario Emission Allowances Free of Charge
3.Quantification, Reporting and Verification of Greenhouse Gas Emissions Regulation (O. Reg. 143/16)
4.Guideline for Greenhouse Gas Emissions Reporting
Further Information:
Proposal Number:
17-MOE008
Posting Date:
April 5, 2017
Summary of Proposal:
The ministry is now proposing amendments that include changes to the:

1. Cap and Trade Program Regulation

2. Methodology for Distribution of Ontario Emission Allowances Free of Charge dated December 12, 2016

3. Quantification, Reporting and Verification of Greenhouse Gas Emissions Regulation

4. Guideline for Greenhouse Gas Emissions Reporting (Effective January 2017)

The proposed changes are included in the Proposed Amendments to the Cap and Trade and Reporting Regulations - Spring 2017 that is posted (please refer to the link below).

Proposed Amendments to the Cap and Trade Regulation
Changes being considered to the Cap and Trade regulation along with the incorporated Methodology include:

1. Changes to the methods for determining the number of allowances to be distributed free of charge to particular facilities in the pulp and paper, mineral wool insulation, used oil processing, and fuel ethanol sectors. The proposal is to move the particular facilities to emissions intensity/ product output benchmark approaches from distributions based on energy use or fixed historical emissions.

2. Updates to selected benchmarks or facility intensity in beer and industrial ethanol sectors to address emissions from additional sources (i.e., cogeneration);

3. Refinement of the method for determining the distribution of allowances free of charge to capped participants based on the amount used where that use differs from the indirect useful thermal energy (e.g., steam) imported;

4. Administrative amendments to improve administration and implementation of the program (e.g., address a situation where a facility becomes a mandatory participant after registering as a voluntary participant in a previous year).

Proposed Regulatory Amendments to the Quantification, Reporting and Verification of Greenhouse Gas Emissions Regulation (O. Reg. 143/16)
Changes being considered to the reporting regulation along with the incorporated Guideline include:

1. Requiring the reporting of emissions from the use of all the process fuels by the iron and steel producer, including emissions from the process fuel that is transferred off-site

2. Requiring capped participants, for whom the cost of carbon is not included in the price of fuels, to report all emissions from the combustion of fuels they receive. Natural gas distributors do not pass on the cost of carbon to capped participants because they are expected to bear the compliance obligation for those emissions. This would require capped participants to report emissions from both:
a. natural gas used at the capped facility; and
b. natural gas transferred offsite to a non-capped facility.

3. Clarifying the requirements for the reporting and verification of production data by capped participants, to support any application for free allowances. Clarification will apply only to the data that are the basis for the allocation of allowances.

Capped participants will also have an associated compliance obligation under the cap and trade program as a result of these changes under items 1 and 2 to the reporting regulation.
Contact Address:
Eric Loi
Senior Engineer, Industrial Specialist
Air Policy Instruments and Program Design Branch
Ministry of Environment and Climate Change
77 Wellesley St. W, 10th floor
Toronto, Ontario, M7A 2T5
Effective Date:
July 6, 2017
Decision:
Approved