In December of last year, the Ontario Ministry of the Environment enacted its Greenhouse Gas Emissions Reporting Regulation (O. Reg. 452/09) under the Environmental Protection Act. Now effective, operators of facilities in specified industries in Ontario emitting 25,000 tonnes or more per year of carbon dioxide equivalent (“CO2e”) will be required to report their emissions on an annual basis.

 

The Regulation specifies 26 relevant industries, including cement manufacturing, electricity generation, glass production, steel manufacturing, petroleum refining, pulp and paper manufacturing, and various other industrial chemical and materials production facilities.

 

The Regulation is accompanied by a technical guideline that outlines mandatory standard quantification methods. Best alternative quantification methods may be used temporarily for reporting 2010 emissions. Third-party verification in accordance with ISO 14064 and 14065 requirements will be required for 2011 emissions and later years.

The purpose of the Regulation is to support the implementation in Ontario of a cap and trade system for emissions trading (also known as carbon trading). Ontario has announced that it will continue to work with the Canadian federal government and other provinces to harmonize emissions reporting requirements. Ontario will also continue to work with the other provinces and U.S. states that are members of the Western Climate Initiative (“WCI”) to harmonize emissions reporting requirements.

 

On September 22, 2009 the U.S. Environmental Protection Agency (“EPA”) issued its Final Mandatory Reporting of Greenhouse Gasses Rule. The rule is now in effect and requires reporting of greenhouse gas emissions by operators of facilities in the U.S. that emit 25,000 tonnes or more per year of emissions. The Ontario and EPA reporting regimes are similar but, unlike the EPA rule, the Ontario Regulation does not apply to fuel suppliers.

 

Ontario has also announced that while small emitters (facilities emitting between 10,000 and 25,000 tonnes per year) are not currently required to report under the Regulation, the Ministry will develop a program to encourage voluntary reporting in anticipation of inclusion of these smaller emitters in the future in emerging North America–wide requirements, with which Ontario will likely align.

 

The Regulation represents a further step towards implementation of a cap and trade system in Ontario. Last year, the Ontario government introduced Bill 185, which received third reading on December 3, 2009. Bill 185 creates a statutory framework under which the Ministry of the Environment may create and implement a cap and trade system. Ontario’s stated policy is that any such system will be harmonized to the requirements of a North America–wide system. In the U.S., in November, 2009, the Senate Committee on Environment and Public Works approved the Kerry-Boxer Clean Energy Jobs and American Power Act. That legislation is comprehensive and includes, among other things, provisions aimed at setting up an economy-wide cap and trade program in the U.S. for reducing greenhouse gas emissions. The U.S. legislation continues to face some obstacles in the U.S. Senate.