A decision has been made to proceed with amendments to the greenhouse gas cap and trade program, which include changes to the:
Cap and Trade Program Regulation (O. Reg. 144/16)
Methodology for Distribution of Ontario Emission Allowances Free of Charge
Quantification, Reporting and Verification of Greenhouse Gas Emissions Regulation (O. Reg. 143/16)
Guideline for Greenhouse Gas Emissions Reporting
The amendments are described in the subsections below.
Regulatory Amendments to the Cap and Trade Program Regulation (O. Reg. 144/16)
The changes to the cap and trade regulation include:
- 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).
- Administrative amendments to the auction and financial assurance provisions of the cap and trade regulation to:
- Clarify the requirement that cash financial assurances must be in an escrow account before permission to bid is given;
- Clarify the acceptable form and manner of letters of credit and guarantee; and
- Create flexibility to adjust the auction date and auction window by a few hours or days without those adjustments affecting other auction-related time limits set out in the regulation that have already expired.
Amendments to the Methodology for Distribution of Ontario Emission Allowances Free of Charge include:
Changes to the methods for determining the number of transitional allowances to be distributed to particular facilities in the pulp and paper, mineral wool insulation, used oil processing, and chemical sectors.
- Updated sector benchmarks or facility-specific intensities in the beer and industrial ethanol sectors to address emissions from additional sources (i.e., cogeneration).
- Refinement of the method for determining the distribution of transitional allowances based on the indirect useful thermal energy amount that is used instead of the amount that is imported.
Regulatory Amendments to the Quantification, Reporting and Verification of Greenhouse Gas Emissions Regulation (O. Reg. 143/16) and Incorporated Reporting Guideline
Changes to the reporting regulation along with the incorporated Guideline include:
- Requiring the reporting of emissions from the use of all the process fuels by the iron and steel producer, including emissions from the combustion of process fuel that is transferred off-site.
- 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 capped participants are expected to bear the compliance obligation for those emissions. This amendment would require capped participants to report emissions from both:
a) natural gas used at the capped facility; and
b) natural gas purchased by the capped facility but used by a non-capped facility.
- Clarification of the requirements for the reporting and verification of production data by capped participants. Emissions and production parameters are already required to be verified under O. Reg. 143/16, these requirements will continue.
- The production parameters are now clearly identified in the Guideline.
- There will be two parts to the verification statement, one for the emissions and a second one for the production parameters data.
- The verification of the production parameter data will not be a mandatory requirement for the application for free allowances at this time.
The Ministry will continue to work with reporting facilities on the requirements for the collection of production parameters, towards the goal of using verified production parameter data submitted under the O. Reg. 143/16 in the application for free allowances.