Proposal to end nitrogen oxide and sulphur dioxide emissions trading

Regulation Number(s):
O. Reg. 397/01
O. Reg. 194/05
Bill or Act:
Environmental Protection Act, 1990
Summary of Proposal:

The Ministry of the Environment, Conservation and Parks is proposing to end the outdated NOx and SO2 emissions trading program (the Program), by revoking the following regulations:
· O. Reg. 397/01: Emissions Trading made under the Environmental Protection Act, 1990
· O. Reg. 194/05: Industry Emissions - Nitrogen Oxides and Sulphur Dioxide made under the Environmental Protection Act, 1990 (the Regulations)

The Program was originally put in place to meet province-wide emission reduction targets and help address smog and acid rain. Since that time, the targets have been met. 
· We are proposing to end the Program because, in its current form, it is no longer effective in reducing emissions from regulated sectors. The following factors support our proposal to end the NOx and SO2 emissions trading program:

o Ontario wide emission targets, set as drivers for the program, have been met.
o Ontario achieved its 2015 SO2 and NOx emissions reduction targets and, overall, the levels of these contaminants have continued to decline across the province.
o Smog days declined from 19 in 2003 to one day in 2019 with one Smog and Air Health Advisory issued.
o Deposition of acid rain in acid-sensitive areas of the Canadian shield in Ontario has also declined.
o Since the trading program was established, Ontario and the federal government have put other regulations in place that are intended to address the discharge of NOx and SO2 emissions to air. 

Emissions of NOx and SO2 are already below the caps that were established for the regulated sectors. Also, many of the regulated facilities hold a surplus of allowances and credits that were issued under the Program, reducing the likelihood that actual emission reduction actions would be undertaken before the surplus is used.

These proposed changes would remove administrative burden and costs associated with complying with the requirements of the Regulations and participating in the Program. These changes would apply to regulated facilities in the electricity generation and industrial sectors.

· Regulated facilities would no longer be required to provide the emissions reports required by the Regulations or incur other costs associated with the Program such as the cost of trading with other program participants. Facilities would still need to report on their emissions as required by other provincial regulations or by federal requirements such as the National Pollutant Release Inventory.

Other information

Ontario is also proposing to make an administrative amendment to O. Reg. 79/15 - Alternative Low Carbon Fuels to preserve the requirement in that regulation for the cement sector to monitor NOx and SO2 emissions on an annual basis using a continuous emissions monitoring system or an approved method.
Analysis of Regulatory Impact:
It is estimated that the proposal will generate an overall net savings for the facilities that participate in the NOx and SO2 emissions trading program. Most regulated facilities are currently complying with the requirements of the program without needing to trade instruments.
Further Information:
Proposal Number:
Posting Date:
October 7, 2020
Comments Due Date:
November 20, 2020
Contact Address:
135 St Clair Ave W, Toronto ON M4V 1P4