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Output-Based Pricing System Regulations (SOR/2019-266)

Regulations are current to 2020-11-02 and last amended on 2020-05-31. Previous Versions

Purpose

Marginal note:Purpose

 These Regulations implement an output-based pricing system for industrial GHG emissions with respect to covered facilities where industrial activities are engaged in.

Overview

Marginal note:System components

 These Regulations set out

  • (a) the manner in which a person responsible for a covered facility must, under Part 2 of the Act, provide a report that sets out the information with respect to the GHG emissions limit and cause the report to be verified;

  • (b) the methods to quantify the GHGs from a covered facility and the production from each specified industrial activity engaged in at the covered facility;

  • (c) the manner of determining the covered facility’s GHG emissions limit based on the facility’s production from each specified industrial activity and the applicable output-based standard; and

  • (d) the manner in which compensation is provided for excess emissions and surplus credits are issued.

Application

Marginal note:Quantification of GHGs

  •  (1) Subject to section 22, GHGs must be quantified for the following emission types:

    • (a) stationary fuel combustion emissions;

    • (b) industrial process emissions;

    • (c) industrial product use emissions;

    • (d) venting emissions;

    • (e) flaring emissions;

    • (f) leakage emissions;

    • (g) on-site transportation emissions;

    • (h) waste emissions; and

    • (i) wastewater emissions.

  • Marginal note:Specified industrial activities

    (2) Output-based standards are established under these Regulations for the following industrial activities:

    • (a) with respect to a covered facility referred to in paragraph (a) of the definition covered facility in section 169 of the Act, the industrial activities set out in column 1 of Schedule 1 that are engaged in at the facility;

    • (b) with respect to a covered facility referred to in paragraph (b) of the definition covered facility in section 169 of the Act, that in a request submitted under subsection 172(1) of the Act specified as its primary activity

      • (i) an industrial activity set out in column 1 of Schedule 1, the industrial activities set out in column 1 of Schedule 1 that are engaged in at the facility, or

      • (ii) an industrial activity other than one set out in column 1 of Schedule 1, the industrial activities – including those set out in column 1 of Schedule 1 – that are engaged in at the facility and that are specified in the notice provided by the Minister that accompanies the covered facility certificate; and

    • (c) with respect to a covered facility referred to in paragraph (b) of the definition covered facility in section 169 of the Act whose primary activity is something other than an industrial activity, that in a request submitted under subsection 172(1) of the Act specifies an industrial activity, the industrial activities specified in column 1 of Schedule 1 that are engaged in at the facility.

End of designation

Marginal note:Cancellation of designation

  •  (1) In accordance with subsection 172(3) of the Act, the Minister may cancel the designation of a covered facility, that was designated on the condition that it would emit at least 10kt of CO2e in any of the three calendar years following the date of first production, if the covered facility has not met that condition as of December 31 of the third calendar year following that date.

  • Marginal note:Notice

    (2) The Minister must provide notice of their intention to cancel the covered facility’s designation to the person responsible for the covered facility at least 30 days before cancelling the designation.

Marginal note:Ceasing to be a covered facility

  •  (1) A facility ceases to be a covered facility under the following circumstances:

    • (a) it has ceased production from all specified industrial activities for five consecutive compliance periods; or

    • (b) the person responsible for the covered facility makes a request to that effect because it is expected that the specified industrial activities engaged in at the covered facility will cease for at least 12 consecutive months.

  • Marginal note:Date of cessation

    (2) A covered facility ceases to be a covered facility on the following date:

    • (a) for the purposes of paragraph (1)(a), on December 31 of the fifth consecutive calendar year for which no production is reported in an annual report; and

    • (b) for the purposes of paragraph (1)(b), on the later of

      • (i) the 30th day following the date the Minister receives the request from the person responsible for the covered facility, or

      • (ii) the date the covered facility ceases production.

  • Marginal note:Cessation of operations during compliance period

    (3) In a circumstance in which a facility ceases to be a covered facility before the end of a compliance period, the person who was responsible for that facility must comply with the obligations set out in Division 1 of Part 2 of the Act, including those set out in these Regulations, in respect of the portion of that compliance period during which it was a covered facility.

Covered Facility

Marginal note:Criteria — definition section 169 of Act

 For the purposes of paragraph (a) of the definition covered facility in section 169 of the Act, the following criteria must be met by a facility that is located in a province or area that is set out in Part 2 of Schedule 1 to the Act:

  • (a) a report was made, in accordance with a Notice with respect to reporting of greenhouse gases (GHGs) published under section 46 of the Canadian Environmental Protection Act, 1999, in respect of that facility indicating that that facility emitted a quantity of GHGs equal to 50kt or more of CO2e, as one or more facilities as defined in such a notice, for the 2014 calendar year or any subsequent calendar year; and

  • (b) the primary activity engaged in at the facility is

    • (i) any of the industrial activities set out in column 1 of Schedule 1, in a province or area, other than Saskatchewan, set out in Part 2 of Schedule 1 to the Act, or

    • (ii) an industrial activity set out in item 5 or 38, column 1, of Schedule 1, in Saskatchewan.

Compliance Period

Marginal note:Compliance period

  •  (1) Subject to subsection (2), a period that begins on January 1 and ends on December 31 for each calendar year, starting in 2019, is specified for the definition compliance period in section 169 of the Act.

  • Marginal note:Partial compliance period

    (2) If a facility becomes a covered facility under the Act after January 1 of a given calendar year, its specified period, for the purposes of the definition compliance period in section 169 of the Act, for that year begins on

    • (a) the effective date of registration that is indicated in the Minister of National Revenue’s notice under subsection 64(2) of the Act; or

    • (b) in the case of a covered facility in Prince Edward Island, the date of registration that is specified in the covered facility certificate issued under subsection 171(2) of the Act.

Person Responsible

Marginal note:Person responsible

 For the purposes of these Regulations, the person responsible for a facility or a covered facility is the person who owns or is otherwise responsible for the facility or covered facility, including the person who has the charge, management or control of the facility or covered facility, or who is the true decision maker with respect to the operations of the facility or covered facility.

Annual Report

Marginal note:Content of annual report

  •  (1) Subject to subsection (2) and section 16, the report that must be submitted by the person responsible for a covered facility for a compliance period under section 173 of the Act is prepared annually for each covered facility for which they are responsible and includes the information listed in Schedule 2 and the following information:

    • (a) in respect of a covered facility, other than one referred to in paragraph (b) or (c),

      • (i) the total quantity of GHGs from the covered facility during the compliance period, expressed in CO2e tonnes, as determined in accordance with section 17, and

      • (ii) the covered facility’s production during the compliance period, from each specified industrial activity, quantified in accordance with section 31;

    • (b) in respect of an electricity generation facility,

      • (i) the total quantity of GHGs from each unit within the covered facility during the compliance period, expressed in CO2e tonnes, as determined in accordance with section 20,

      • (ii) the sum of the total quantities of GHGs determined under subparagraph (i) for all units within the facility, expressed in CO2e tonnes,

      • (iii) the production during the compliance period by each unit within the covered facility from each of the industrial activities set out in paragraphs 38(a) to (c), column 1, of Schedule 1 that are engaged in at the unit, separately for each industrial activity, quantified in accordance with section 32, and

      • (iv) the sum of the production from all of the units within the covered facility during the compliance period, from all of the industrial activities set out in paragraphs 38(a) to (c), column 1, of Schedule 1;

    • (c) in respect of a covered facility, where the specified industrial activities are both the production of coal by mining coal deposits and, if composed of a unit or a group of units that are registered under the Reduction of Carbon Dioxide Emissions from Coal-fired Generation of Electricity Regulations, the generation of electricity,

      • (i) the total quantity of GHGs from the covered facility during the compliance period, which is the sum of the total quantity of GHGs from the mining of coal deposits, determined in accordance with section 17, and the total quantities of GHGs from the generation of electricity, determined in accordance with section 20, expressed in CO2e tonnes,

      • (ii) with respect to the production of coal by mining coal deposits, the production during the compliance period from each specified industrial activity, in accordance with section 31, and

      • (iii) with respect to the generation of electricity,

        • (A) the production during the compliance period by each unit within the covered facility from each of the industrial activities set out in paragraphs 38(a) to (c), column 1, of Schedule 1 that are engaged in at the unit, separately for each industrial activity, in accordance with section 32, and

        • (B) the sum of the production from all of the units within the covered facility during the compliance period, from all of the industrial activities set out in paragraphs 38(a) to (c), column 1, of Schedule 1;

    • (d) the quantity of GHGs emitted from the covered facility during the compliance period as determined in accordance with section 35, and, if captured and stored CO2 is being subtracted under that section, the total quantity of CO2 captured and stored in a storage project that meets the criteria in subsection 35(2);

    • (e) the GHG emissions limit applicable to the covered facility for the compliance period, calculated

      • (i) in respect of a facility referred to in paragraph (a), in accordance with section 36, 36.1 or 36.2,

      • (ii) in respect of a facility referred to in paragraph (b), in accordance with section 41, 41.1 or 41.2, and

      • (iii) in respect of a facility referred to in paragraph (c), in accordance with section 42; and

    • (f) the positive result (corresponding to the quantity of GHGs emitted in excess of the emissions limit) or negative result (corresponding to the difference between the quantity of GHGs emitted and the emissions limit and indicating emissions below the emissions limit) obtained under section 44 for the compliance period, expressed in CO2e tonnes.

  • Marginal note:Increased electricity generation capacity

    (1.1) For the purposes of subparagraph (1)(a)(ii), if section 36.2 applies with respect to a covered facility, the annual report must include the gross quantity of electricity generated that is attributed the capacity added to the equipment and gross quantity of electricity generated that is attributed to the capacity of the equipment before the additional capacity was added, separately, quantified in accordance with section 31 and subsection 36.2(3).

  • Marginal note:Increased electricity generation capacity

    (1.2) For the purposes of subparagraphs 1(b)(iii) and (iv) and (c)(iii), if section 41.2 applies with respect to an electricity generation facility, the annual report must include,

    • (a) for each unit whose electricity generation capacity from gaseous fuels was increased by 50 MW or more and that has a thermal energy to electricity ratio of less than 0.9, the gross amount of electricity generated during the compliance period by each unit that is attributed to the capacity added to the unit and the gross amount of electricity generated that is attributed to the capacity of the unit before the additional capacity was added, in accordance with section 32 and subsection 41.2(3), separately; and

    • (b) the sum, from all of the units referred to in paragraph (a), of the gross amount of electricity generated that is attributed to the capacity added to the units and of the gross amount of electricity generated that is attributed to the capacity of the units before the additional capacity was added, separately.

  • Marginal note:Exception — new covered facilities

    (2) Paragraphs (1)(e) and (f) do not apply with respect to a report that must be submitted by the person responsible for a covered facility for which sections 36 to 42 do not apply under section 43.

 
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