The Ontario Ministry of the Environment and Climate Change
(MOECC) is proposing regulatory amendments to the province's
cap-and-trade program, including revised methods for allocating
free allowances to specified facilities, as well as other
What You Need To Know
Proposed changes to the Cap and Trade
Program Regulation (O. Reg. 144/16) and the Methodology for
Distribution of Ontario Emission Allowances Free of Charge (Free
Allowance Methodology) include:
moving from energy use or historical
emissions-based allocation to the product output benchmark or
emissions intensity-based methods for certain facilities;
updating existing product output
benchmarks and historical emissions intensities to better align
with facility and sector emissions;
clarifying that facilities which
receive indirect useful thermal energy (e.g., imported steam) and
pass some of it on to other facilities are eligible for free
allowances only in respect the portion they consume on-site;
administrative amendments to improve
program administration and implementation.
Complementary amendments are being
proposed to the Quantification, Reporting and Verification of
Greenhouse Gas Emissions Regulation (O. Reg. 143/16) and the
Guideline for the Quantification, Reporting and Verification of
Greenhouse Gas Emissions (Reporting Guideline).
The MOECC is accepting public
comments on its proposal until May 20, 2017.
Proposed Amendments to the Cap-and-Trade Program
Changes to O. Reg. 144/16 and Free Allowance
Based on stakeholder consultation, the MOECC has proposed
amendments to the Free Allowance Methodology to better account for
changes in facility production and operations, and to move from
energy use and historical emissions-based methods to product output
benchmark and emissions intensity-based methods, as follows:
Certain facilities in the used oil
processing, pulp and paper, mineral wool insulation, consumer
products, and fuel ethanol sectors are currently eligible to
receive free allowances under the energy use method or historical
absolute emissions method. Under the MOECC's proposal, the free
allocation of allowances to these facilities would be based on the
product output benchmark or historical absolute emissions
Recognizing that certain facilities
in the industrial ethanol and beer production sectors have
emissions associated with onsite cogeneration, the MOECC is
proposing to revise current allocation methods (which are based on
historical emissions intensity or product output benchmarks) so
that the amount of free allowances these facilities may receive
will also account for cogeneration emissions.
Under the MOECC's proposal,
facilities that receive indirect useful thermal energy (e.g.,
imported steam) and transfer some of it to other facilities will be
eligible for free allowances only in respect of the portion they
Changes to O. Reg. 143/16 and Reporting
The MOECC is also proposing certain amendments to O. Reg. 143/16
and the Reporting Guideline, including the following:
Under O. Reg. 143/16, when process
fuels used by iron and steel producers are transferred off-site,
the responsibility for emissions reporting is currently imposed on
the recipient facility, whereas the transferor remains eligible to
apply for free allowances. The MOECC proposes to require iron and
steel producers to report emissions from all such process fuels,
including any amount that is transferred off-site.
To address cases where natural gas
distributed to a capped participant is then transferred to a
non-capped participant, the MOECC is proposing to require a capped
participant to report emissions for natural gas used at its own
facility as well as for any volume transferred to a non-capped
Comments on the proposed amendments can be submitted to the
MOECC online through the
Environmental Registry by May 20, 2017.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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