As set-out in our recent blog post, the federal government is moving ahead with a two-pronged federal carbon pricing system that will come into effect in 2019. The system will consist of: (i) a charge on fossil fuels that are consumed within a province, which will be administered by the Canada Revenue Agency (the fuel charge will generally be paid by fuel producers and distributors); and (ii) an output-based pricing system (OBPS) that applies to emission-intensive industrial facilities, which will be administered by Environment Canada and Climate Change (ECCC). Last week, the federal government provided some detail regarding the charge on fossil fuels and the rebates that will be available to the provinces in which the federal system will be implemented.
The federal government has also published some details and guidance regarding the OBPS. The OBPS will apply to “covered” facilities, which are set out in the Notice Establishing Criteria Respecting Facilities and Persons and Publishing Measures and include most industrial activities (such as the production of ammonia, the smelting and refining of metals, production of cement, etc.) but also include the generation of electricity using fossil fuels. This means that facilities that use fossil fuels to generate electricity, such as natural gas fired power plants, will not pay the federal charge on fossil fuels. Instead, they will pay a carbon price (starting with $20 per tonne of emissions) on the amount of greenhouse gases they emit above a specified level. See our earlier blog post for the mechanics of the OBPS.
Registration for the OBPS began today and will continue until the end of the year. The federal government has published a guidance document to assist covered facilities in completing their registrations as soon as possible.