On November 4, 2016 the Ministry of the Environment and Climate Change (MOECC) posted proposed amendments to the cap and trade program regulations to the Environmental Registry (EBR 012-8953) for 30 days to gather comments on the policy, technical, and administrative changes under consideration for Ontario’s greenhouse gas cap and trade program. In addition, MOECC held webinars and met with stakeholders, including industries, associations, environmental organizations, and labour groups, to provide an overview of the proposed amendments and receive their input. These consultations helped to inform the final amendments to cap and trade program regulations. The following subsections provide a summary of key comments received and responses.
Indirect Useful Thermal Energy (IUTE)
Comment: General support for addition of IUTE. Multiple requests for this amendment to take effect for 2017 allocations, not 2018 as proposed. Further request considerations related to: multiple facilities with complex energy agreements; integrated energy generation vs. imported energy generation; and, other Combined Heat and Power applications.
Response: This comments regarding effective date have been addressed. Allowances would be provided starting with the 2017 emission year. MOECC is undertaking additional consultation and data gathering to assess the impact.
Allocation Methods for Allowances Free of Charge
Comment: Multiple requests to re-evaluate allocation methods applied to specific facilities or sectors.
Response: MOECC is undertaking additional consultation and data gathering to assess the impact.
Comment: General support for including additional fuel sources but requests for explicitly stating that it does not apply to biomass based fuels. One request to be exempt from the compliance obligations.
Response: This is consistent with previous policy direction to cover electricity generation; MOECC is proceeding with amendment to ensure emissions associated with process fuels are covered.
Petroleum Product Supply
Comment: Strong support for alignment of definition of supplier with Greener Diesel. Requests for exemption of fuel exported from Ontario via formal exemption or through Attestation forms.
Response: This has been addressed. The regulatory language specifies only fuels for use in Ontario are to be reported, thereby exempting exported fuels.
Errors Discovered Post-Compliance Period True-up
Comment: Support for any future vintage to be applicable, support for only the current year vintage to be applicable, and requests for restriction of the reconciliation period to 6 months.
Response: MOECC is proceeding with the option of unrestricted use of future vintage. A reconciliation period of 6 months already exists in the regulation.
Comment: General support for the addition of Clearing Houses. WCI market rules are too restrictive and would reduce market liquidity (allowance holding limits, restriction on transfers out of compliance accounts, residency restriction for market participants, five day limit on clearing house transactions). Eligibility for registration should be broader to include clearing agencies recognized by other security regulators in Canada.
Response: These rules are necessary to maintain market integrity. Ontario needs to be aligned with California and Quebec to support future linking of the programs. Eligibility has been addressed. Clearing agencies regulated in other jurisdictions would be eligible to register as clearing houses.
Comment: Request to adopt California approach to Primary Account Representative Residency requirements.
Response: Ontario’s proposed approach is consistent with but not identical to both California and Quebec program rules and facilitates a well-functioning market.
Change of Ownership
Comment: Requests that transfers of allowances to the new owners be mandatory not optional as proposed.
Responses: The proposed approach is consistent with Quebec and provides flexibility to the parties to suit their contractual arrangements.
Transparency and Disclosure
Comment: General support for additional transparency around bidding strategy consultants. Requests for specific requirements of these disclosures. General Support for ability to share information with related parties. Additional request to include financial institutions.
Response: Ontario will consider any additional amendments that may be needed (i.e., extending exception to banks) in concert with Quebec and California to ensure a consistent policy is put in place.
Comment: Multiple requests received for draft regulatory language to review. Requests for longer period to review the posting and provide thoughtful comments.
Response: MOECC must proceed with final amendments now to ensure rules are in place to facilitate the March auction.
Quantification, Reporting and Verification of GHG Emissions Guideline
Comment: General support for proposed changes. Some technical corrections were proposed.
Response: MOECC is reviewing the proposed technical corrections and is assessing them for accuracy and consistency with policy direction.