CANADA Law and Practice Contributed by: Thomas McInerney, Selina Lee-Andersen, Sonia J. Struthers and Elyse Bouey, McCarthy Tétrault LLP
based on generating capacity. Emissions require - ments are set to begin in 2035 and reach net-zero by 2050, with compliance flexibility through bankable and tradeable compliance credits and offset credits. The federal government recently suspended these rules in Alberta following significant provincial opposition and has announced its intention to adjust the regulations to provide greater flexibility to maintain reliable and affordable energy costs for Canadian families. Provincial Legal Regimes British Columbia British Columbia’s Output-Based Pricing System (BC OBPS), under the Greenhouse Gas Industrial Report- ing and Control Act (SBC 2014, c. 29), took effect April 1, 2024 (replacing the CleanBC Industrial Incen - tive Program) and – following repeal of the consumer carbon tax on 1 April 1 2025 – is the province’s prin - cipal industrial carbon-pricing mechanism. It generally applies to facilities emitting at least 10,000 tonnes of CO₂e annually, assigning emissions limits by product- specific intensity benchmarks; facilities below their benchmark earn credits, and those above meet the shortfall with eligible credits, offset units or payments to the Province, subject to monitoring, reporting and third-party verification. British Columbia also operates a Low Carbon Fuel Standard under the Low Carbon Fuels Act (SBC 2022, c. 21), as amended and modernised from 1 Janu - ary 2024, requiring transportation-fuel suppliers to reduce the lifecycle carbon intensity of the fuels they sell through a market-based credit system rewarding lower-carbon fuels such as renewable diesel, ethanol, renewable natural gas, hydrogen and electricity. Alberta Alberta was the first jurisdiction in North America to implement a binding carbon-emission-reduction regime, which currently takes the form of the Tech- nology Innovation and Emissions Reduction Regu- lation (Alta Reg 133/2019) (TIER). TIER is a facility- specific OBPS regime. Facilities that annually emit more than 100,000 tonnes of CO₂e or import more than 10,000 tonnes of hydrogen, or that voluntarily opt into the TIER regime, must reduce their annual emissions intensity (emissions per unit of production) pursuant to the least stringent of either a High Perfor -
mance Benchmark or a Facility Specific Benchmark. Compliance can be achieved through physical abate - ment of emissions and/or “trueing up” the obligation by applying emission offsets, emission performance credits (EPCs), fund credits, sequestration credits (an emission offset derived from geological sequestration – stackable with CFR compliance credits), and cap - ture recognition tonnes (converted from a sequestra - tion credit and usable only by a facility that captured and exported the CO2). Emission offsets and EPCs are recorded and tracked in the Alberta Emission Offset Registry and the Alberta Emission Performance Credit Registry, respectively. Transactions are bilaterally negotiated, with no pre - scribed pricing but some practical pricing implica - tions. Saskatchewan Saskatchewan’s climate policy is anchored by Prairie Resilience: A Made-in-Saskatchewan Climate Change Strategy (December 2017), a provincial framework outlining Saskatchewan’s approach to climate change mitigation and adaptation, supported by a Climate Resilience Measurement Framework tracking pro - gress across natural systems, infrastructure, eco - nomic sustainability, community preparedness and measuring, monitoring and reporting. Saskatchewan’s OBPS program, established under The Management and Reduction of Greenhouse Gases Act (SS 2010, c. M-2.01), requires regulated facilities to meet emission-intensity standards. Below- limit emitters earn tradable performance credits, while those above may buy credits or pay into the Saskatch - ewan Technology Fund. The province paused the industrial carbon tax rate under its OBPS program in April 2025 but regulated facilities are still required to submit emissions reports. Ontario Ontario’s Emissions Performance Standards (EPS) program (in force since 1 January 2022) regulates GHG emissions from large industrial facilities in the manufacturing, resource and electricity-generation sectors, assigning each an annual limit under perfor - mance standards that tighten yearly.
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