In preparation for the introduction of its cap-and-trade system, Ontario’s Ministry of the Environment and Climate Change (MOECC) is seeking comments on proposed amendments to the Greenhouse Gas Emissions Reporting Regulation (O. Reg. 452/09) (the “Regulation”). Currently, the Regulation requires certain facilities (as identified under the Regulation) emitting 25,000 tonnes or more of carbon dioxide equivalent (“CO2e”) per year to report and verify their emissions data.

Under the proposed amendments, MOECC is looking to:

  • lower the reporting threshold to 10,000 tonnes CO2e from the current threshold of 25,000 tonnes per year, while maintaining the requirement to have emissions greater than 25,000 tonnes per year third party verified;
  • divide the emission sources into those that are reporting only and those that require third party verification;
  • add petroleum product suppliers and natural gas distributors to the Regulation starting in 2016, to support the implementation of a cap-and-trade program; and
  • add other sources to the reporting regulation including: equipment used for natural gas transmission, distribution and storage; electricity imports; electricity transmission and distribution; magnesium production; and mobile equipment at facilities.

Once adopted, the proposed amendments would significantly increase the amount of emissions reported and the number of facilities reporting under the Regulation. In calculating emissions for the purposes of the reporting threshold, a reporting entity would be able to deduct from its total CO2e emissions any carbon dioxide emissions from the combustion of biomass. There will be no emissions thresholds for electricity importers to prevent them from sub-dividing into smaller entities to avoid compliance obligations (similar to how California treats its electricity importers).

With respect to the reporting threshold for liquid petroleum fuel distributors/suppliers, this will be set at 200 litres of fuel to ensure consistency with the requirement in Québec. While the verification threshold will remain at 25,000 tonnes of CO2e, any liquid fuel distributor/suppliers (estimated by MOECC to be over 30 companies) that exceed the 200 litre threshold will be required to verify their emissions reports. Finally, all electricity importers (estimated by MOECC to be in the range of 30-50 companies) will be required to verify their emissions reports.

The amended Regulation will also categorize certain emission sources as being subject to reporting requirements only. This means that these emissions will need to be reported, but would not be subject to verification or potential compliance requirements under the cap-and-trade program. These proposed categories include:

  • fugitive geothermal units and hydrofluorocarbons (HFC) emissions from cooling units at electricity generators;
  • coal storage emissions;
  • biomass combustion emissions; and
  • on-site emissions from mobile equipment.

Technical changes to the calculation methods are also proposed to align with Québec and California on missing data, analysis methods, and reporting of production data. Details of the proposed regulation amendments are provided in the accompanying Regulatory Proposal: Proposed Amendments to Greenhouse Gas Emissions Regulation (O.Reg. 452/09) and Incorporated Guideline, along with the calculation methods for the new sources.

In terms of compliance, the MOECC is in the process of reviewing and comparing penalties under Ontario’s Environmental Protection Act with those available under Québec’s cap-and-trade regime. Monetary penalties for non-compliance with greenhouse gas reporting requirements in connection with the cap-and-trade program are also under consideration by the MOECC.

The proposed amendments have been posted for a 45 day public review and comments may be submitted to the MOECC’s designated contact person or online by October 29, 2015.