Output-Based Pricing System Regulations (SOR/2019-266)

Emissions Limit

Marginal note:General rule

• 36 (1) Subject to subsection (2) and sections 16, 36.1, 36.2 and 42, the person responsible for a covered facility, other than an electricity generation facility, must determine the GHG emissions limit that applies to that covered facility for each compliance period, expressed in CO₂e tonnes, in accordance with the formula

  The summation of the products of Ai and the result of Bi minus the product of Bi, C and D minus 2022 for each specified industrial activity “i”.

  

  where

  A_i

  is the covered facility’s production from each specified industrial activity “i” during the compliance period, quantified in accordance with section 31;

  B_i

  is the following output-based standard applicable to the specified industrial activity “i”, as the case may be:

  • (a) for a specified industrial activity set out in column 1 of Schedule 1 and for which an output-based standard is set out in column 3 of that Schedule, that standard,

  • (b) for a specified industrial activity set out in column 1 of Schedule 1 and for which column 3 of that Schedule sets out that an output-based standard must be calculated in accordance with section 37, the output-based standard calculated in accordance with that section, and

  • (c) for an additional industrial activity, the output-based standard calculated in accordance with section 37;

  C

  is the following tightening rate applicable to the specified industrial activity “i”, as the case may be:

  • (a) 0% for the specified industrial activity set out in item 38, column 1, of Schedule 1,

  • (b) 1% for the specified industrial activities set out in paragraph 3(c) and items 7, 8, 13, 17, 19, 20, 34, 40, 41 and 43, column 1, of Schedule 1, and

  • (c) 2% for all other specified industrial activities;

  D

  is the calendar year that corresponds to the compliance period; and

  i

  is the i^th specified industrial activity where “i” goes from 1 to n and where n is the total number of specified industrial activities engaged in at the covered facility.

• Marginal note:Ethanol production

  (2) For the purposes of subsection (1), the person responsible for a covered facility must not include the specified industrial activity set out in paragraph 13(b), column 1, of Schedule 1 unless the covered facility also includes the specified industrial activity set out in paragraph 13(a), column 1. The covered facility is deemed to not be engaged in the specified industrial activity set out in item 32, column 1, of that Schedule.

• Marginal note:Oilseeds

  (3) For the purposes of subsection (1), the person responsible for a covered facility where the specified industrial activity set out in item 31, column 1, of Schedule 1 is engaged in may, for the 2019 calendar year, quantify their production in finished oilseed products and use an output-based standard of 0.0431 CO₂e tonnes per unit of measurement of production, instead of the production metric set out in column 2 and the output-based standard set out in column 3.

• Marginal note:Clarification — fertilizer

  (4) For greater certainty, if the industrial activity set out in paragraph 29(b), column 1, of Schedule 1 and also any of the industrial activities set out in paragraph 29(c), (d) or (e), column 1, of Schedule 1 are engaged in at the covered facility, the output-based standard applicable to the industrial activity set out in that paragraph 29(b) applies and the output-based standard applicable to the industrial activity set out in that paragraph 29(c), (d) or (e) applies, as the case may be.

• Marginal note:New additional industrial activity

  (4.1) For the purposes of subsection (1), an additional industrial activity that was recognized by the Minister during a calendar year is not included in the determination of the GHG emissions limit for the compliance period that corresponds to that calendar year.

• Marginal note:Output-based standard

  (5) For the purposes of subsection (1), if an output-based standard must be calculated, it is calculated once, except in the situation referred to in subsection 39.

Marginal note:New electricity production — gaseous fuel

• 36.1 (1) Despite subsection 36(1), if a covered facility — other than one referred to in subsection 16(6) — begins generating electricity on or after January 1, 2021 and meets the following criteria, the person responsible for the covered facility must apply, for the specified industrial activity set out in paragraph 38(c), column 1, of Schedule 1, the applicable output-based standard, in accordance with subsection (2), for each compliance period, as of the compliance period during which the covered facility began generating electricity:

  • (a) the electricity is generated from gaseous fuel by equipment that is designed to operate at a thermal energy to electricity ratio of less than 0.9; and

  • (b) the covered facility has an electricity generation capacity equal to or greater than 50 MW from that equipment.

• Marginal note:Decreasing output-based standard

  (2) The output-based standard that applies to the industrial activity referred to in paragraph 38(c), column 1, of Schedule 1 is, as the case may be

  • (a) 370 CO₂e tonnes per unit of measurement, for the 2021 compliance period,

  • (b) 329 CO₂e tonnes per unit of measurement, for the 2022 compliance period,

  • (c) 288 CO₂e tonnes per unit of measurement, for the 2023 compliance period,

  • (d) 247 CO₂e tonnes per unit of measurement, for the 2024 compliance period,

  • (e) 206 CO₂e tonnes per unit of measurement, for the 2025 compliance period,

  • (f) 164 CO₂e tonnes per unit of measurement, for the 2026 compliance period,

  • (g) 123 CO₂e tonnes per unit of measurement, for the 2027 compliance period,

  • (h) 82 CO₂e tonnes per unit of measurement, for the 2028 compliance period,

  • (i) 41 CO₂e tonnes per unit of measurement, for the 2029 compliance period, and

  • (j) 0 CO₂e tonnes per unit of measurement, for the 2030 compliance period and subsequent compliance periods.

Marginal note:Increased capacity of electricity generation

• 36.2 (1) Subject to subsections 16(1) to (5) and (7) to (10), if, on or after January 1, 2021, a covered facility — other than a covered facility referred to in subsection 16(6) — increases its electricity generation capacity from gaseous fuels by 50 MW or more and that increased capacity is from equipment that has a thermal energy to electricity ratio of less than 0.9 and that was added after that date or has had its capacity increased and, the person responsible for the covered facility must determine the covered facility’s GHG emissions limit for each compliance period, as of the compliance period during which the increase occurred, in accordance with subsection (2).

• Marginal note:Different output-based standard

  (2) The GHG emissions limit that applies to the covered facility for a compliance period, expressed in CO₂e tonnes, is determined in accordance with the formula

  The summation of the products of Ai and the result of Bi minus the product of Bi, C and D minus 2022 for each specified industrial activity “i”, plus the summation of the products of E and F and the products of G and F and the products of H and I.

  

  where

  A_i

  is the covered facility’s production during the compliance period, quantified in accordance with section 31,

  • (a) from each specified industrial activity “i”, except the industrial activity set out in paragraph 38(c), column 1, of Schedule 1, and

  • (b) from the specified industrial activity set out in paragraph 38(c), column 1, of Schedule 1, other than from equipment referred to in the descriptions of E, G and H;

  B_i

  is the following output-based standard applicable to the specified industrial activity “i”, as the case may be:

  • (a) for a specified industrial activity set out in column 1 of Schedule 1 and for which an output-based standard is set out in column 3 of that Schedule, that standard,

  • (b) for a specified industrial activity set out in column 1 of Schedule 1 and for which column 3 of that Schedule sets out that an output-based standard must be calculated in accordance with section 37, the output-based standard calculated in accordance with that section, and

  • (c) for an additional industrial activity, the output based standard calculated in accordance with section 37;

  C

  is the following tightening rate applicable to the specified industrial activity “i”, as the case may be:

  • (a) 0% for the specified industrial activity set out in item 38, column 1, of Schedule 1,

  • (b) 1% for the specified industrial activities set out in paragraph 3(c) and items 7, 8, 13, 17, 19, 20, 34, 40, 41 and 43, column 1, of Schedule 1, and

  • (c) 2% for all other specified industrial activities;

  D

  is the calendar year that corresponds to the compliance period;

  E

  is the gross amount of electricity generated during the compliance period by the equipment that started generating electricity from gaseous fuels on or after January 1, 2021, and is designed to operate at a thermal energy to electricity ratio of less than 0.9, from the specified industrial activity set out in paragraph 38(c), column 1, of Schedule 1, quantified in accordance with section 31;

  F

  is the output-based standard set out in subsection 36.1(2) that is applicable for the compliance period;

  G

  is, for equipment with increased electricity generation capacity and a thermal energy to electricity ratio of less than 0.9, other than equipment referred to in the description of E, the gross amount of electricity generated during the compliance period attributed to the capacity added to the equipment, from the specified industrial activity set out in paragraph 38(c), column 1, of Schedule 1, quantified in accordance with section 31 and subsection (3);

  H

  is, for equipment with increased electricity generation capacity and a thermal energy to electricity ratio of less than 0.9, other than equipment referred to in the description of E, the gross amount of electricity generated during the compliance period attributed to the capacity of the equipment before the additional capacity was added, from the specified industrial activity set out in paragraph 38(c), column 1, of Schedule 1, quantified in accordance with section 31 and subsection (3);

  I

  is the output-based standard set out in item 38, column 3, of Schedule 1 that is applicable to the specified industrial activity set out in paragraph 38(c), column 1 of that Schedule; and

  i

  is the i^th specified industrial activity where “i” goes from 1 to n and where n is the total number specified industrial activities engaged in at the covered facility.

• Marginal note:Apportionment of electricity generation

  (3) For the purposes of the descriptions of G and H in subsection (2), the gross amount of electricity generated by the equipment referred to in those descriptions is apportioned, using engineering estimates, to the equipment’s capacity added to the equipment and to the capacity of the equipment before the additional capacity was added, based on the ratio of the amount of its increased capacity to its total capacity, taking into account the increased capacity.

• Marginal note:Increased capacity — rule

  (4) For the purposes of subsection (1), the electricity generation capacity of a facility increases by 50 MW or more for a calendar year as of the day on which its electricity generation capacity is 50 MW greater than its electricity generation capacity on December 31, 2020. For greater certainty, any increase in capacity is cumulative.

Marginal note:Presumption

36.3 If the output-based standard set out in subsection 36.1(2) applies to a covered facility’s generation of electricity for a given compliance period, it continues to apply for all subsequent compliance periods even if

• (a) for the purposes of section 36.1, the covered facility is not generating electricity from gaseous fuel or the equipment in question has a thermal energy to electricity ratio that is equal to or greater than 0.9; or

• (b) for the purposes of section 36.2, the equipment in question is not generating electricity from gaseous fuel or has a thermal energy to electricity ratio that is equal to or greater than 0.9.

Marginal note:Calculated output-based standard

• 37 (1) Subject to subsection (3) and sections 38 and 39, the output-based standard that is applicable to a specified industrial activity of a covered facility, for which an output-based standard must be calculated in accordance with this section, is calculated in accordance with the formula

  

  where

  A

  is the quantity of GHGs that are emitted from the covered facility for reference year “i”, determined in accordance with section 35, expressed in CO₂e tonnes;

  B

  is the allocation for net thermal energy for reference year “i” and is

  • (a) determined by the formula

    0.062 CO₂e tonnes/gigajoules × (M − N) × O

    where

    M

    is the quantity of thermal energy produced by the covered facility that was sold to another covered facility in reference year “i”, as indicated by the quantity of thermal energy on sales receipts or determined by another objective method, expressed in gigajoules,

    N

    is the quantity of thermal energy that was bought from other covered facilities and not subsequently sold in reference year “i”, as indicated by the quantity of thermal energy on sales receipts or by another objective method, expressed in gigajoules, and

    O

    is the ratio of heat from the combustion of fossil fuels to produce thermal energy and is,

    • (i) if M is greater than N, the ratio of heat determined under section 34 for reference year “i” for the covered facility, or

    • (ii) if M is less than N, the ratio of heat determined under section 34 for reference year “i” for the covered facility from which the thermal energy was purchased, and

  • (b) 0 for all reference years if the absolute value of the quotient obtained by dividing the sum of the results determined under paragraph (a) for each reference year “i” by the number of reference years is less than the quotient determined by the formula

    

  C

  is the total quantity of GHGs from all specified industrial activities engaged in at the facility for reference year “i” other than the industrial activity for which the output-based standard is being calculated, determined in accordance with sections 17 and 18;

  D

  is the production from a covered facility from the specified industrial activity for which the output-based standard is being calculated for reference year “i” quantified in accordance with section 31;

  E

  is the GHG emissions reduction factor applicable to the specified industrial activity for which the output-based standard is being calculated and is

  • (a) 95% for a specified industrial activity set out in paragraph 7(c), 8(b) or (c) or 20(d), column 1, of Schedule 1,

  • (b) 90% for a specified industrial activity set out in item 22 or paragraph 23(a) or 29(d), column 1, of Schedule 1, and

  • (c) 80% for all other specified industrial activities;

  F

  is the total quantity of GHGs from an activity engaged in at the facility, for reference year “i”, that is not a specified industrial activity, determined in accordance with sections 17 and 18, if

  • (a) with respect to a covered facility whose primary activity is an industrial activity,

    • (i) that quantity accounts for 20% or more of the total quantity of GHGs from a covered facility for that reference year, determined in accordance with sections 17 and 18, or

    • (ii) the revenue, in dollars, attributable to the sale of the product produced by the facility from that industrial activity accounts for 20% or more of the revenue, in dollars, attributable to the sale of all products produced by the facility from all of the facility’s industrial activities for that reference year, or

  • (b) with respect to a covered facility whose primary activity is not an industrial activity,

    • (i) the activity is not an industrial activity, or

    • (ii) the quantity of GHGs from an industrial activity accounts for 20% or more of the total quantity of GHGs from a covered facility, for that reference year, determined in accordance with sections 17 and 18; and

  G

  is the quantity of CO₂ determined for the purposes of the description B in section 35, from all activities engaged in at the facility for reference year “i” other than the industrial activity for which the output-based standard is being calculated; and

  i

  is the i^th reference year, where “i” goes from 1 to n and where n is the number of reference years, determined in accordance with subsection (2).

• Marginal note:Reference years

  (2) Subject to paragraph (2.1)(a), the reference years applicable to the specified industrial activities that are engaged in at a covered facility for which an emissions limit is calculated for a compliance period are

  • (a) except for a covered facility referred to in paragraph (b),

    • (i) the 2017, 2018 and 2019 calendar years, if the data are available for those years,

    • (ii) the three calendar years preceding the compliance period, if the data are not available for the 2017, 2018, and 2019 calendar years, or

    • (iii) the compliance period, if the data are not available for the years specified in subparagraphs (i) and (ii); and

  • (b) for a covered facility for which an emissions limit is being calculated for the first time but for which the person responsible has submitted an annual report under these Regulations for a previous compliance period without including the information referred to in paragraphs 11(1)(e) and (f) in accordance with subsection 11(2), either

    • (i) the two calendar years preceding the compliance period for which the emissions limit is calculated, if the data are available for those years,

    • (ii) the calendar year preceding the compliance period for which the emissions limit is calculated, if the data are not available for the two calendar years referred to in (i), or

    • (iii) the compliance period for which the emissions limit is being calculated, if that data are not available for those preceding calendar years.

• Marginal note:New activity

  (2.1) For the purposes of subsection (1), if the calculation of the emissions limit for a compliance period takes into account a specified industrial activity that began to be engaged in at the covered facility during that compliance period and for which an output-based standard has not previously been calculated under this section

  • (a) the applicable reference years with respect to that specified industrial activity are that compliance period and the two calendar years following it; and

  • (b) the determination of the output-based standard for that specified industrial activity is to be made based on projections, made using engineering estimates, for the applicable reference years.

• Marginal note:Attributing of emissions

  (2.2) For the purposes of the descriptions of C, F and G in subsection (1), the method used to attribute the quantity of GHGs to an activity must be rigourous, objective and based on sound engineering principles. The same method must be used for each reference year and no quantity of GHGs may be attributed to more than one activity.

• Marginal note:Thermal energy allocation

  (3) For the purposes of subsection (1), if an output-based standard must be calculated with respect to a covered facility for more than one specified industrial activity, the allocation for net thermal energy can only be deducted from one of those calculations.

• Marginal note:Rounding

  (4) The result from the calculation under subsection (1) is rounded to three significant figures.