Climate change is a global problem that requires collective action.
In April 2015, the government announced it would be limiting greenhouse gas pollution by implementing a cap and trade program and its intent to link Ontario’s program with those of Quebec and California.
On May 19, 2016, two regulations that form the backbone of the cap and trade program became law under the Climate Change Mitigation and Low-carbon Economy Act, 2016 – the Cap and Trade Program Regulation (O. Reg. 144/16) which took effect July 1, 2016 and the Quantification, Reporting and Verification of Greenhouse Gas Emissions Regulation (O. Reg. 143/16) which took effect January 1, 2017.
Ontario’s cap and trade program came into effect on July 1, 2016, with the first compliance period beginning on January 1, 2017.
Ontario has previously indicated its intent to link its program with the program of California and Quebec. Economic modelling has shown that linking Ontario’s cap and trade program with California and Quebec will help Ontario meet its greenhouse gas emission reduction targets at the lowest cost.
Ontario is now putting forward a proposal to make a number of amendments to the existing cap and trade program regulations to provide for linking, set 2021-2030 caps and other amendments aimed at improving fair and equitable treatment amongst program participants. This includes administrative amendments to improve data reliability and program efficiency.
A new service of documents regulation under the Climate Change Mitigation and Low-carbon Economy Act, 2016 (CCMLEA) is being proposed to provide the regulated community with certainty and clarity as to how documents can be given or served under the Act.
Additionally, to help ensure compliance and maintain market integrity, a regulation is being proposed for administrative penalties that would apply to contraventions of the CCMLEA and its regulations. Implementation of administrative penalties will form part of the ministry’s suite of graduated compliance and enforcement tools under the CCMLEA – providing the ministry with the ability to choose the most appropriate and effective compliance tool, or combination of tools, to maximize compliance and prevent or deter future non-compliance. To ensure transparent and appropriate application of administrative penalties, the ministry will be developing guidance material to be used by the ministry when applying and calculating administrative penalties. The ministry intends on posting this draft guidance material on the Environmental Registry, for consultation, as part of the process of implementing any administrative penalties.
The following elements are included in the Proposed Amendments to the Cap and Trade and Reporting Regulations – September 2017 document that is posted (please refer to the link under the additional information).
The following changes are proposed:
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 reporters to submit verification reports.
Proposed Amendments to the Cap and Trade Program Regulation (O.Reg. 144/16)
Changes being considered to the Cap and Trade regulation along with the incorporated Methodology include:
- Establishing the 2021-2030 caps under the program.
- Recognizing compliance instruments from California and Quebec so these may be used to meet compliance obligations and to make them eligible for trading in the market by Ontario participants.
- Holding joint auctions for the sale of emission allowances with California and Quebec.
- Adjusting holding limits for allowances and credits, and purchase limits for allowances to account for the emissions cap of all three jurisdictions.
- Requiring related persons in Ontario to share holding and purchase limits with related persons in California and Quebec.
- Allowing registration in multiple jurisdictions for
a. capped participants to ensure they are able to demonstrate compliance in all jurisdictions and
b. offsets sponsors so they are eligible to receive recognition for offset initiatives undertaken in other jurisdictions.
- Require voluntary participants to register by September 1 of the year prior to the year they wish to assume the compliance obligations for their emissions.
- Change the deadline for submitting an application for free allowances to October 1.
- Change the deadline for transfer of allowances distributed free of charge for the second year following the compliance period (e.g., change from January 15, 2022 to October 25, 2021 for allocating allowances for 2022).
- Provide free allowances to capped facilities that are customers to the regional cogeneration system in the Sarnia area and possibly imposing a direct compliance obligation on them for emissions from natural gas used in the cogeneration system.
- Provide allowances free of charge for fixed process emissions to voluntary participants for which they have a compliance obligation.
Proposed Service of Documents Regulation
Ontario is proposing to develop a regulation under the CCMLEA that would provide clarity and certainty with regard to how documents can be given or served under the Act.
The following elements are included in the Proposed Administrative Penalties Regulation document that is posted (please refer to the link under the additional information).
Proposed Administrative Penalties Regulation
Ontario is proposing to develop a regulation under the CCMLEA that would establish a framework for issuing administrative penalties. The proposed regulation would govern the determination of the amount of, and the manner in which, the ministry will issue an order to pay an administrative penalty for non-compliance with the CCMLEA and its regulations, including:
- The framework and process for issuing administrative penalties
- The ranges of penalties and their maximum amounts
- The considerations that would be made when determining exact penalty values
- Potential reductions for actions taken to prevent and mitigate the contravention subject to the administrative penalty