On November 4, 2016, the Ministry of the Environment and Climate Change (MOECC) released proposed amendments to two key regulations, and two additional documents under Ontario’s Cap and Trade Program (the Amendments). The purpose of the Amendments is to clarify the policy, technical and administrative requirements of Ontario’s Cap and Trade Program (which we covered in a previous post here).

The Amendments will affect 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 takes effect January 1, 2017. There will also be changes to two additional documents, the “Methodology for Distribution of Ontario Emission Allowances Free of Charge, and the “Guideline for Greenhouse Gas Emissions Reporting.”

Some of the proposed changes to the Cap and Trade Program Regulation include:

  • Clarifying that market participants must be Canadian residents or corporations incorporated in Canada;
  • Clarifying that the new owner or operator of a facility with emissions covered by the program bears the obligation to submit compliance instruments for all greenhouse gas emissions for the entire compliance period;
  • Aligning Ontario’s Cap and Trade Program with that of California and Quebec by (i) clarifying the requirement to report subsidiaries and parents of non-corporation partnerships, (ii) requiring the disclosure of consultants and advisors on bidding strategies at auctions, and (iii) collecting personal information from persons approved by Quebec and California and who are being designated as account agents by participants registering in Ontario;
  • Allowing for the registration of clearing houses as market participants to give them the ability to provide clearing services to other registered participants in the program (clearing houses would need to register as a market participant and submit supporting documentation of their recognition by the Ontario Securities Commission);
  • Ensuring emissions resulting from electricity generation using fuel other than natural gas or petroleum products (e.g., process fuel) have a compliance obligation in the program;
  • Providing allowances free of charge for emissions resulting from indirect useful thermal energy (IUTE) (e.g. steam) imported by voluntary and mandatory participants.

The Amendments also make changes to the Quantification, Reporting and Verification of Greenhouse Gas Emissions Regulation, including (i) aligning that regulation with the approach to inter-refiner transfers in the Greener Diesel – Renewable Fuel Content Requirements for Petroleum Diesel Fuel Regulation (O. Reg. 97/14), and (ii) complementary changes supporting distribution of allowances free of charge for IUTE imported by a voluntary or mandatory participant.

A number of miscellaneous technical clarifications and corrections as identified in the draft revised methodology will also be made to the “Methodology for Distribution of Ontario Emission Allowances Free of Charge,” and the “Guideline for Greenhouse Gas Emissions Reporting.”

The text of the proposed amendments is not available. However, a summary has been posted on the Environmental Registry for a 30 day public review and comment period starting November 4, 2016.