CANADA Law and Practice Contributed by: Thomas McInerney, Selina Lee-Andersen, Sonia J. Struthers and Elyse Bouey, McCarthy Tétrault LLP
Registration is mandatory for facilities that meet the definition of an “EPS facility”, which generally includes those engaged in a covered industrial activity that have reported at least 50,000 tonnes of CO₂e emissions in any year since 2014. Smaller facilities emitting at least 10,000 tonnes, newly built facilities, or those com - pleting eligible modifications may voluntarily opt in. A facility with a compliance obligation can meet EPS by reducing emissions or acquiring compliance instru - ments consisting of: excess emissions units (generally non-tradeable units purchased from the Ontario gov - ernment at a rising price) or emissions performance units (tradeable, bankable units awarded to facilities that emit below their limit). Compliance-payment rev - enue is reinvested in emissions-reduction projects at eligible facilities, helping them stay competitive while lowering emissions. Québec Quebec’s cap-and-trade system (C&T System) encourages businesses to reduce their GHG emis - sions by setting a price on carbon. It is made up of three main features. First, it caps emissions: the government sets an annu - ally declining maximum, and emitters must surrender one “emission allowance” per tonne emitted. Second, participants obtain emission rights by free allocation, quarterly government auctions or sec - ondary-market purchases (the system also covers transportation and heating fuels, so fuel prices rise for consumers too). Third, revenues are reinvested to combat climate change in Quebec. The C&T System creates a large amount of revenue, which the province uses to fund part of its climate action. New Brunswick, Nova Scotia and Prince Edward Island (PEI) Under New Brunswick’s OBPS, facilities emitting 50,000 tonnes or more of CO₂e annually must meet the system’s performance standards (those emitting 10,000-50,000 tonnes may opt in), with a compliance obligation for any shortfall, aiming to reduce emis - sions while maintaining competitiveness and limit - ing carbon leakage. Regulated facilities register, set
a product baseline intensity and file annual verified- emissions and compliance reports. Nova Scotia’s OBPS targets a 53% GHG reduction by 2030 and net-zero by 2050, using the federal carbon price to drive reductions among large emitters while preserving competitiveness. Registered facilities meet a manufacturing performance standard: below-stand - ard emitters earn tradable or bankable performance credits, while those above pay the federal price per excess tonne or buy credits. As in New Brunswick, facilities over 50,000 tonnes are mandatory partici - pants and those emitting 10,000-50,000 may opt in. Rather than an output-based pricing system, Prince Edward Island focuses on emissions tracking, using ECCC’s National Inventory Report for official data. Its Net - zero Carbon Act (SPEI 2020, c. 90) targets GHG emissions below 1.2 megatonnes of CO₂e per year from 2030, and carbon neutrality by 2040, a decade ahead of the federal 2050 goal. 2.4 Key Policy/Regulatory Authorities Federally, the GGPPA and OBPS are regulated by the Minister of Environment and Climate Change, sup - ported by ECCC, with carbon-pricing policy and the national benchmark set by the Department of Finance. Each province’s respective regime is generally gov - erned by the provincial department in charge of cli - mate change measures. Assessed against their constitutional and administra - tive mandates and their technical capacity, the current allocation of authority is, on balance, well-matched to the jurisdictionally shared character of climate change while acknowledging regional differences in energy resources and industries. 2.5 Bilateral/Multilateral Co-Operation Under the Paris Agreement 2.5.1 Article 6.2 – Internationally Transferred Mitigation Outcomes Canada is engaged internationally on Paris Agreement implementation but at an early stage on operational - ising Article 6.2. Federal materials acknowledge the potential role of internationally transferred mitigation outcomes (ITMOs) and the need for authorisation under Article 6, but no final decisions have been tak -
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