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

Marginal note:Conflict of interest

• 50 (1) The person responsible for a covered facility must ensure that no real or potential conflict of interest exists between the person and the accredited verification body, including members of the verification team and any individual or corporate entity associated with the verification body, that is a threat to or compromises the verification body’s impartiality that cannot be effectively managed.

• Marginal note:Consecutive verifications

  (2) The person responsible must not have their annual report verified by a verification body that has verified six consecutive annual reports prepared under these Regulations with respect to the same covered facility, unless three years have elapsed since the last of those reports was verified. However, a corrected report may be verified by the verification body within those three years if it is in relation to an annual report verified by that verification body.

• Marginal note:Maximum number of verifications

  (3) The person responsible for a covered facility must not have more than a total of six of its annual reports prepared under these Regulations for the same covered facility verified by the same verification body within a period of nine years.

Marginal note:Facility visit

• 51 (1) Subject to subsection (2), the person responsible for a covered facility must ensure that their covered facility is visited by an accredited verification body in the following situations:

  • (a) it is the initial verification of the covered facility under these Regulations or by the verification body;

  • (b) two calendar years have passed since a verification body has visited the covered facility for the purposes of verifying an annual report or corrected report;

  • (c) in the last annual report for the covered facility prepared under these Regulations, the verification body made a determination

    • (i) that a material discrepancy exists with respect to the total quantity of GHGs or production reported in the annual report from a specified industrial activity that is used in the calculation of the emissions limit, or

    • (ii) that the annual report was not prepared in accordance with these Regulations; or

  • (d) the verification body is of the opinion a site visit is required.

• Marginal note:Other visits

  (2) If buildings that are used for legal, administrative or management purposes are not located where an industrial activity is carried out, the person responsible for a covered facility must ensure that the verification body visits those buildings if data or information necessary for verifying an annual report or a corrected report is kept in those buildings.

Marginal note:Content of verification report

52 A verification report is prepared by a verification body in relation to the annual report and corrected report, if applicable, and any related data and information, and includes the information contained in Schedule 5.

Compensation and Compliance Units

Minister’s Intervention

Marginal note:Determination

• 53 (1) The Minister may establish the emissions limit or determine the quantity of GHGs emitted from the covered facility for the compliance period if

  • (a) there is a material discrepancy with respect to the total quantity of GHGs from the covered facility or the production from one or more specified industrial activities used in the calculation of the emissions limit reported in the annual report or the corrected report for the compliance period;

  • (b) the verification opinion referred to in paragraph 3(n) of Schedule 5 that is included in the verification report that accompanies an annual report or corrected report for the compliance period indicates that it is impossible to determine that a material discrepancy does not exist or that the annual report or corrected report was prepared in accordance with these Regulations;

  • (c) the emissions limit for the covered facility that is indicated in the annual report or corrected report for the compliance period was not calculated in accordance with these Regulations and any resulting error was equal to or greater than 2%; or

  • (d) the annual report for the compliance period was not submitted to the Minister.

• Marginal note:Criteria

  (2) The Minister is to establish the emissions limit or determine the quantity of GHGs emitted from the covered facility for the compliance period, as the case may be, based on the following:

  • (a) the annual report and verification report for the compliance period and, if necessary, any previous reports;

  • (b) any report made in accordance with the Notice with respect to reporting of greenhouse gases (GHGs) published under the Canadian Environmental Protection Act, 1999;

  • (c) information in respect of industrial activities, in Canada or in other jurisdictions, similar to those of the covered facility, that allows for the determination of production amounts for the covered facility;

  • (d) accepted quantification methods used to calculate the GHGs from facilities engaged in the same industrial activity or in the same type of industrial activity as the covered facility; and

  • (e) any other information provided, on the Minister’s request, by the person responsible for the covered facility or the verifier.

• Marginal note:Notice

  (3) The Minister must notify the person responsible for the covered facility, in writing, of their determination with respect to the emissions limit or the quantity of GHGs emitted from the covered facility established for the compliance period.

Compensation and Issuance of Surplus Credits

Marginal note:Excess emissions

54 For the purposes of subsection 174(1) of the Act, if, during a compliance period, a covered facility emits GHGs in a quantity that exceeds the applicable emissions limit, the compensation to be provided by the person responsible for that facility is to be established based on the quantity of GHGs, expressed in CO₂e tonnes, that was emitted in excess of the emissions limit as reported in the annual report submitted for the compliance period or the Minister’s determination under section 53, as the case may be.

Marginal note:Excess emissions charge payment

• 55 (1) Any compensation that is provided by means of an excess emissions charge payment must be made electronically to the Receiver General for Canada.

• Marginal note:Surplus credits

  (2) Any compensation that is provided by means of a remittance of surplus credits must be made in the manner set out in section 70.

• Marginal note:Other compliance units

  (3) Any compensation that is provided by means of a remittance of compliance units other than surplus credits must be made in the manner set out in section 71.

Marginal note:Minimum percentage — charge

56 A minimum of 25% of the compensation that is required under section 174 of the Act must be provided by means of an excess emissions charge payment for each compliance period beginning with the 2022 compliance period.

Marginal note:Regular-rate compensation deadline

• 57 (1) For the purposes of subsection 174(3) of the Act, the regular-rate compensation deadline is December 15 of the calendar year in which the related annual report must be submitted.

• Marginal note:Exception

  (1.1) Despite subsection (1), for the compliance period that ends on December 31, 2019, the regular-rate compensation deadline is April 15, 2021.

• Marginal note:Increased-rate compensation deadline

  (2) For the purposes of subsection 174(4) of the Act, the increased-rate compensation deadline is February 15 of the calendar year following the deadline under subsection (1).

• Marginal note:Exception

  (2.1) Despite subsection (2), for the compliance period that ends on December 31, 2019, the increased-rate compensation deadline is June 15, 2021.

• Marginal note:Notice referred to in subsection 53(3)

  (3) However, if a notice of determination under subsection 53(3) is issued after October 31 of the year in which the related annual report is due

  • (a) the regular-rate compensation deadline is 45 days after the day on which the notice is issued; and

  • (b) the increased-rate compensation deadline is 60 days after the day on which the regular-rate compensation deadline under paragraph (a) expires.

Marginal note:Compensation information

58 A person that is responsible for a covered facility must, at the time compensation is provided, submit to the Minister the following information:

• (a) the covered facility certificate number;

• (b) the provision of the Act under which the compensation is being provided;

• (c) the compliance period for which compensation is being provided;

• (d) the quantity of GHGs emitted in excess of the emissions limit in respect of which the compensation is provided, expressed in CO₂e tonnes;

• (e) the details of any excess emissions charge payment, including

  • (i) the amount in dollars paid to the Receiver General for Canada,

  • (ii) the applicable rate, and

  • (iii) the date of payment;

• (f) the details of any surplus credits or offset credits remitted, including, for each type of credit,

  • (i) the number remitted,

  • (ii) the date of the remittance transaction,

  • (iii) the remittance transaction number,

  • (iv) the serial numbers, and

  • (v) the date or dates on which they were issued; and

• (g) the details of any units or credits, recognized as compliance units, remitted, including

  • (i) the number remitted,

  • (ii) the province or program authority referred to in subsection 78(1) that issued the units or credits,

  • (iii) the date of their retirement or the date they are designated for use exclusively as a compliance unit for the purposes of remittance to the Minister under section 174, paragraph 178(1)(a) or subsection 181(2) of the Act, as the case may be,

  • (iv) the serial numbers assigned to them by the province or program authority referred to in subsection 78(1),

  • (v) the start date of the offset project for which the unit or credit was issued,

  • (vi) the year in which the GHG reduction or removal occurred for which the unit or credit was issued,

  • (vii) the offset protocol applicable to the project for which the unit or credit was issued, including the version number and publication date, and

  • (viii) the name of the accredited verification body that verified the units or credits.

Marginal note:Surplus credits

• 59 (1) For the purposes of section 175 of the Act and subject to subsection (2), the number of surplus credits, equivalent to the difference between the emissions limit and the quantity of GHGs emitted from the covered facility, that the Minister issues is based on what is reported in the annual report submitted for the compliance period if the emissions limit that was set out in the report was calculated in accordance with these Regulations, unless a material discrepancy within the meaning of subsection 49(2) exists with respect to the total quantity of GHGs or the production from one of the specified industrial activities that is used in the calculation of the emissions limit for the compliance period.

• Marginal note:Exception

  (2) The Minister will not issue surplus credits if the Minister has established the emissions limit or determined the quantity of GHGs emitted from the covered facility for the compliance period under section 53.