Multi-Sector Air Pollutants Regulations, response to comments: part 3

Part 3 - Cement


4.1 Stakeholders raised concerns regarding sections of the regulatory text that deal with prohibitions and how compliance would be assessed. The proposed prohibition provisions for assessing compliance with the sulphur dioxide (SO2) and oxides of nitrogen (NOX) emission standards suggested that compliance with the emission standards would be assessed on an instantaneous basis and not on an annual basis as was the intent.

Response: The regulatory text has changed as a result of these comments to clarify how the emissions standards apply.

4.2 Stakeholders commented that the requirements linked to the use of a flowmeter as part of a continuous emission monitoring system (CEMS) unit in Part 3 of the Regulations was also referenced in Part 4 of the proposed Regulations.

Response: Based on this comment and further consideration, the regulatory text has changed and is now harmonized. The requirements associated with the installation and operation of CEMS, including the use of flow meters, are found in Part 4 of the Regulations.

4.3 Cement industry stakeholders expressed concerns that other equally valid methods of establishing clinker production quantities are being used by industry, other than those found in the proposed Regulations, and that these methods should also be allowed for determining production. Furthermore, the Regulations should allow the use of other methods that could be developed in the future. 

Response: The regulatory text has changed as a result of these comments. One other quantification method for determining clinker production quantities is accepted and consequently the production provisions are expanded to include this method.

4.4 The Department received a comment that identified an inconsistency in the stack test requirements. Stack test provisions could be interpreted to apply exclusively to NOX. The commenters suggested that this be changed in the Regulations to cover all emission parameters or groupings of emission parameters.

Response: The regulatory text has changed as a result of these comments. The Regulations now include the reference method for sulphur dioxide (SO2) and addresses all of the emission parameters.

4.5 During the consultation process for the development of the air emission standards, the Cement Working Group reached a consensus and proposed that compliance reporting would start two years after pre-publication in Canada Gazette, Part I (CGI) and that compliance with the emission standards would come into force two years later. This sequencing of compliance timelines was designed to allow cement facilities the time required to design and implement the necessary measures to comply with the requirements of the Regulations. In their comments, stakeholders requested that the compliance dates, as prescribed in the proposed regulatory text, be adjusted to reflect the time elapsed between the pre-publication of the proposed Regulations and the publication of the final Regulations.

Response: The regulatory text has changed as a result of these comments. Compliance and reporting timelines are aligned with the compliance period beginning on January 1st of the year following publication of the Regulations in Canada Gazette, Part II (CGII).

Cost-Benefit Analysis

4.6 Two provincial governments questioned whether and how emission projections in the business as usual (BAU) scenario take into account requirements of existing provincial regulations.

Response: The Department made changes to the cost-benefit analysis (CBA) as a result of this comment. The Ontario regulation 194/05 that sets a cap and trade system on industrial air pollutants was modelled for annual releases of NOX and SO2 emissions from Ontario cement facilities while the technology requirements set under the Alberta Environmental Protection and Enhancement Act were modelled by adjusting the projected NOX and SO2 emission intensities of certain kilns.

4.7 One stakeholder indicated that the emission analysis for cement did not assume any capital replacement and argued that this could lead to an overestimation of emissions in the BAU scenario. The stakeholder indicated that the analysis should assume that older kilns will be replaced with more energy-efficient kilns in the future, thereby reducing the BAU emissions.

Response: Improvement in energy efficiency is considered in the updated CBA. It is modelled in E3MC, from which emissions, production, and energy efficiency projections were obtained.

4.8 One stakeholder suggested that selective non-catalytic reduction (SNCR) costs provided in a U.S. EPA analysis be used for the CBA for estimating compliance costs instead of SNCR costs provided in the report published by the European Commission on the cement industry.

Response: For the purpose of estimating industry compliance costs with the NOX performance standard, the Department has considered a range of studies in the U.S. and Europe. As the costs provided in the European study are associated with a level of stringency that is more comparable with the Regulations than those in the U.S. EPA analysis, the analysis uses the costs provided in the European study. Thus, no changes were made to the CBA.

4.9 One industry stakeholder raised concerns regarding the competitiveness analysis for the cement sector. The stakeholder stated that an increase in operating costs of 0.1% to 1.5% may be significant and could have consequences in some industries. The stakeholder recommended that any operating cost increase that could put facilities at risk be fully understood and actions be considered to mitigate the potential negative outcomes.

Response: Based on updated compliance cost estimates, the Department estimates that operating costs are not likely to increase by more than 0.2% for any cement facility expected to experience an impact as a result of the Regulations. This expected increase in operating costs is likely to be a minor determinant of profitability compared to other pre-existing competitive factors. Some of these factors may include fluctuating exchange rates, energy costs, and in some regions, increased competition from foreign producers. Additionally, the Regulations for the cement sector were developed by a technical working group consisting of Federal, Provincial and industry representatives. Representatives from the cement industry expressed support for the Regulations during pre-consultations prior to CGI pre-publication.

4.10 One industry stakeholder expressed concerns that the annual administrative costs were underestimated and commented that they should be higher.

Response: The administrative costs presented in the CGI Cement CBA were based on the survey results provided by cement companies. The Department further consulted with the Cement Association of Canada following the CGI pre-publication and obtained industry estimates of hours per year per facility for each administrative activity.  The industry estimates were considered in the updated CBA.

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