Decarbonization Incentive Program (DIP 2.0 Intake): Applicant Guide
The second intake of the Output-Based Pricing System Proceeds Fund – Decarbonization Incentive Program is open from August 8, 2023 at 9:00 AM (ET) until October 6, 2023 at 5:00 PM (ET)
1. Purpose of this Guide
This Applicant Guide has been developed to assist applicants in completing and submitting their application to the second intake of the Output-Based Pricing System (OBPS) Proceeds Fund Decarbonization Incentive Program (DIP) stream. This Guide outlines key program requirements, including eligibility criteria for applicants and projects, merit criteria for project selection and mandatory documentation. The Guide also provides detailed instructions for completing and submitting an application form through the on-line application system called the Program Information Management System (PIMS).
Please read this Guide carefully, including all the annexes. To start an application within PIMS, please register with the Single Window Information Management (SWIM) system by following the instructions available on Reporting through Single Window: Environment and Climate Change Canada.
Should you have any additional questions you may wish to visit Decarbonization Incentive Program: what you need to know or contact Environment and Climate Change Canada (ECCC).
2. The OBPS Proceeds Fund Overview
2.1 Pricing Carbon Pollution
In December 2020, the Government of Canada released its Strengthened Climate Plan (SCP), A Healthy Environment and a Healthy Economy, outlining federal policies, proposals, programs and $15 billion in investments to build a stronger, cleaner, more resilient and inclusive economy. The SCP confirmed that the Government of Canada will continue to put a price on carbon pollution, rising until 2030. The strengthened price trajectory is critical to delivering on Canada’s heightened climate ambition, including the target of reducing greenhouse gas (GHG) emissions to 40-45% below 2005 levels by 2030 and reaching net-zero emissions by 2050.
The Output-Based Pricing System (OBPS) is designed to retain a price on the carbon pollution that creates incentive for large industrial facilities to reduce their emissions per unit of output, while mitigating the risks of negative effects on competitiveness caused by carbon pricing and carbon leakage, that is, the risk of industrial facilities moving from one jurisdiction to another to avoid paying a price on carbon pollution. Covered facilities are required to provide compensation for GHG emissions that exceed an emissions limit and are issued surplus credits if their emissions are lower than the applicable emissions limit. Facilities can sell surplus credits or bank them for use in future years.
To ensure that carbon pollution pricing is applied throughout Canada, the OBPS applies to any province or territory that requests it or that does not implement its own system that meets the federal benchmark requirements. These provinces and territories are referenced in this document as eligible jurisdictions.
2.2 The Federal Approach for Returning OBPS Proceeds
The Government of Canada has committed to return proceeds collected from the OBPS to jurisdictions of origin. Jurisdictions that have voluntarily adopted the OBPS can opt for a direct transfer of proceeds collected. Proceeds collected in other backstop jurisdictions (current or past) will be returned through the two program streams of the OBPS Proceeds Fund.
The Decarbonization Incentive Program (DIP) stream is a merit-based program that incentivizes the long-term decarbonization of Canada’s industrial sectors by supporting clean technology projects to reduce GHG emissions. Proceeds collected from federal OBPS non-electricity generating facilities will be returned via DIP to the jurisdictions of origin funding the most competitive decarbonization projects.
The Future Electricity Fund (FEF) is designed to support clean electricity projects and/or programs. Proceeds collected from OBPS covered electricity generating facilities (i.e. utilities) will be returned through funding agreements with governments of eligible jurisdictions or other designated third parties within the jurisdictions of origin. An open call for project proposals is not anticipated under FEF.
This Guide is solely focused on the requirements for the second DIP intake (DIP 2.0 intake), hereafter referred to as “the program.”
2.3 Program Objectives
The program’s key objective is to incentivize long-term decarbonization of Canada’s industrial sectors and support Canada’s GHG emissions reductions goals. The program will support single or multi-year projects to accelerate the deployment of commercially available and proven low-carbon technologies and processes that will further reduce GHG emissions in eligible jurisdictions.
3. Program Requirements
This section provides guidance for questions in the application form. To be considered for funding under the program, applicants must meet all of the program requirements and eligibility criteria outlined in Section 3. It should be assumed that applications will be reviewed as submitted only.
3.1 Eligible Provinces
In order to return proceeds from the OBPS to the jurisdictions of origin, the program will be delivered in provinces where the OBPS is currently in effect or has been applied in the past. Eligible provinces are:
- New Brunswick
3.2 Eligible Applicants
To be considered for funding under the program, applicants must:
- be legal entities incorporated or registered in Canada
- operate or have a controlling ownership stake in an eligible facility covered under the federal OBPS, located in one of the eligible provinces (as per Section 3.1 and 3.3), and
- demonstrate* they have the authority over the facility or asset to undertake the project
*Applicants will be required to provide proof of ownership or a declaration of written authority showing that the applicant has permission from the owner to undertake the project.
3.3 Eligible Facilities
To be considered for funding under the program, projects must occur at eligible covered facilities. Eligible facilities are those that:
- are located within an eligible province (see Section 3.1)
- are or were a covered facility under Part 2 of the Greenhouse Gas Pollution Pricing Act, and
- do not generate electricity as their primary activity (see Section 3.4 for more details)
3.4 Ineligible Facilities
Utility electricity generation facilities are ineligible for funding under the program. This includes facilities that are primarily engaged in the generation of electric power for sale (i.e., those with a primary NAICS code of 22111) as well as standalone district energy system facilities that sell both electricity and heat or cooling services (i.e., those with a primary NAICS code of 22133). Proceeds collected from these types of facilities will be used to fund the FEF program stream, as described in Section 2.2.
However, facilities that generate and use electricity for other activities, in whole or in part, are eligible to apply if they meet other program eligibility criteria. For example, industrial facilities (such as a facility with an integrated cogeneration unit) or institutional facilities (such as universities or hospitals with campus power plants) that generate electricity and use it to support their own activities are considered eligible.
3.5 Project Eligibility
To be considered for funding under the program, the project must occur at an eligible facility per Section 3.3, cannot already be underway, and must result in GHG emissions reductions. To be eligible, these GHG emissions reductions must be:
- material in the year 2030 and measurable over the lifetime of the project
- affecting sources of GHG emissions either within the facility’s direct control and/or from acquired sources of energy such as electricity or purchased heat/steam
- incremental to GHG emissions reductions obtained by other required or planned actions, such as regulatory requirements or business-as-usual maintenance and repairs, or necessary replacement of end-of-life equipment
More information on how to determine GHG emissions reductions associated with the proposed project can be found in the GHG Estimation Guide for Projects, available for download in PIMS along with the required GHG Workbook.
Note that the GHG Workbook and GHG Estimation Guide for Projects have been updated since the last intake. Applicants must download the most recent version of these documents for the DIP 2.0 intake from the Templates and Guidance section of the application form in PIMS.
Examples of eligible project activities are listed in Table 1 below. This list is not exhaustive – activities not listed that meet all other eligibility criteria could be considered eligible. Work associated with the project that does not directly result in GHG emissions reductions may still be eligible for funding if it is required to complete eligible activities (e.g., required training to operate equipment, building of outbuildings to house equipment, etc.). For definitions of these activity types, please see Annex A.
|Activity Category||Activity Types|
|Energy efficiency||Stationary equipment retrofits for energy efficiency|
|Mobile equipment retrofits for energy efficiency|
|Building envelope upgrades (insulation, windows, doors)|
|Fuel switching||Stationary equipment retrofits for fuel switching|
|Mobile equipment retrofits for fuel switching|
|Energy production||Clean electricity production for own use|
|Low-carbon fuel production for own use|
|District energy and/or heating|
|Non-energy related||Organic waste diversion (e.g., anaerobic digestion, composting)|
|Industrial process changes|
|Industrial product use changes|
|Carbon capture||Carbon capture & storage|
|Carbon capture & utilization (Note that utilization for Enhanced Oil Recovery (EOR) is ineligible.)|
Projects will be assessed to ensure they are eligible as described above. In addition, projects will be screened for specific eligibility criteria through questions in Section 3 of the Application Form, explained in detail in Subsections 3.5.1 through 3.5.5 below. ECCC may contact applicants during the assessment process to clarify application details. It is the responsibility of the applicant to provide comprehensive, clear, and complete information when submitting their application and to respond in a timely manner to requests for clarification
3.5.1 Technology Readiness Level
The program will only fund projects using technologies at a Technology Readiness Level (TRL) of 8 or above (i.e., the technology has been proven to work in its final form under expected operational conditions). For more information on TRL levels, please see the Technology Readiness Level Assessment Tool.
The program will not support projects that make use of technologies that are still being developed or are unproven in the expected operational conditions. However, if the project represents the first full implementation of key technologies (e.g., a demonstration project has been completed), it is still eligible under this criterion.
3.5.2 Material GHG Reductions
In order to be considered for funding, projects must result in material and direct GHG reductions in 2030 and over the lifetime of the project. GHG reductions are material if the results are tangible, measurable, achievable, and contribute meaningfully towards Canada’s GHG reduction targets. GHG reductions are direct if they are controlled by the applicant, including acquired emissions from purchased electricity or steam.
In particular, the following activities are ineligible for funding, as they do not meet the requirement of material GHG reductions:
- Demonstration and pilot activities: Projects that involve pilot or demonstration activities are ineligible for funding. Demonstration and pilot activities test the operational or technical viability of a piece of equipment, product or process in order to determine effectiveness and feasibility (refer to TRL levels 1-7) for permanent use. Critically, a demonstration or pilot activity may be discontinued, and is not guaranteed to lead to long-term implementation, depending on the operational results. Since the continuity of the activity’s GHG reductions are dependent on the outcome of the demonstration or pilot, the results are not considered material GHG reductions. Any concurrent demonstration and pilot activities must also be excluded from the project scope and expenditures.
- Implementation readiness activities: The decision to proceed with the project cannot be dependent on the results of any planned or ongoing studies, tests, or investigations (e.g., feasibility studies, Preliminary Front End Engineering Design (Pre-FEED), drilling appraisal well for carbon storage). Projects that are not ready to be implemented may be ineligible as such studies must be completed before the application is submitted. In addition, a project cannot be or include a standalone engineering study. The scope of the project must include concrete actions that will lead to measurable GHG reductions.
- Capacity building: In order to focus on activities that result in direct GHG emissions reductions, standalone educational or capacity-building projects will not be funded. However, it should be noted that technical staff or end-user training directly related to the implementation of the project is not considered a “standalone” element and can be eligible for funding.
- Behavioural change: In order to focus on activities that result in assured, in-scope GHG emissions reductions, projects with the primary aim of incenting behavioural change, either of persons working for an applicant organization or otherwise, are ineligible for funding. For example, projects that monitor energy use to encourage actions that may reduce consumption but do not implement energy-saving technology are not eligible for funding. However, monitoring equipment associated with automated controls for other activities can be eligible for funding as long as it is clearly justified in the GHG Workbook how the activity will lead to material GHG reductions.
- Operational change: GHG reductions arising purely from operational changes that cannot be guaranteed even through the implementation of a capital project are ineligible as the applicant can revert to previous operations. For example, projects cannot account for potential GHG reductions from purchasing a low-carbon fuel from the market (e.g., renewable natural gas or virtual purchase of renewable electricity) if they can easily revert to using an emitting fuel instead. If a project includes the production of low-carbon fuel or electricity for own-use or “locks-in” the use of the low-emitting fuel, for example through permanent retrofits, the ongoing use of the fuel or electricity can be assumed in the project scenario.
3.5.3 Incremental GHG Reductions
Projects must have GHG reductions that are incremental to required actions to be eligible for funding. GHG emissions reductions are incremental if they will be achieved in addition to what would occur in the business-as-usual or baseline scenario. The following considerations will be assessed to determine if a project is incremental to required actions:
- Activities already underway: Projects or activities that are already underway are ineligible for funding as the GHG reductions can now be expected to occur, regardless of the program funding the project. For example, purchase of capital equipment or commencement of project construction are indicators that the project is underway. Projects that are related to a planned expansion at an existing facility, whereby applicants have already planned or begun the expansion, are eligible if the proposed alternative activities result in GHG reductions relative to the existing plans for the expansion. See Section 3.5.4. for additional information on projects related to expansions.
- Regulatory compliance: Projects or activities that are required to be undertaken for regulatory compliance are ineligible for funding. Note that this does not preclude eligibility of expenditures for steps of project implementation that are required by regulation, such as obtaining required assessments or permits. Furthermore, it is recognized that all applicants will be participants in the OBPS, a regulatory system. As the OBPS does not require specific mitigation activities, activities that reduce OBPS compliance obligations and/or result in surplus credits are expected and eligible.
- Routine maintenance and end-of-life equipment: Activities that must be undertaken as part of routine maintenance are ineligible for funding. In addition, the replacement of equipment that has failed or has reached the end of its useful life is ineligible for funding, unless it can be demonstrated that the replacement represents a significant improvement over an appropriate baseline. For example, a deep retrofit that would eliminate the use of traditional fossil fuels rather than increase the efficiency of the existing emitting technology may be eligible even if the equipment being replaced is at end-of-life. More information on how to account for anticipated changes to existing equipment over time can be found in the GHG Estimation Guide for Projects, available for download in PIMS.
3.5.4 Projects at Planned Expansions (Avoided Future Emissions)
Projects that will avoid GHG emissions that are expected to occur at planned expansions of OBPS facilities, but do not reduce emissions from any existing sources, may be eligible for funding. These projects must clearly demonstrate in the Application Form and GHG Workbook that these emission sources are highly likely to occur in the absence of the project. Only projects meeting the specific requirements noted below are eligible for funding to ensure that the project is incremental and the GHG reductions are material. Responses to question 3.7 of the Application Form, the project description, and GHG Workbook will support ECCC’s review.
- Existing facilities: Projects that are solely associated with expansions of existing facilities (e.g., due to increase in production) may be eligible for funding. The overall expansion initiative itself (e.g., construction of the building, re-development of a facility’s decommissioned wing etc.) is ineligible for funding, however, future GHG emissions can be avoided from specific aspects of the expansion if best-in class, lower-emitting equipment, or processes are selected. However, projects proposed at new facilities are ineligible, as projects must occur at an existing OBPS facility.
- Emitting assets: Projects that solely avoid future emissions at expansions cannot involve the installation of new emitting assets. Switching to equipment or processes that utilize low carbon alternatives including electricity, biomass and biofuels, clean hydrogen, solar or geothermal is permitted but switching to lower-emitting fossil fuels such as natural gas is ineligible. Projects at expansions should represent best-in-class, clean technologies and avoid the possibility of stranded emitting assets and carbon lock-in.
- Project timeline: The project’s implementation timeline must be based on the completion timeline of the overall expansion. As such, expansions must be completed and operational by the confirmed program end date, prior to March 31, 2028, for the project to result in 2030 GHG reductions.
- Justification of the baseline scenario: The proposal must include a qualitative description of the merit of the project over what is planned and used as the business-as-usual or baseline scenario. Describe how the project is an improvement over what was planned (for example, what is industry standard and how the equipment is best available technology). If the project involves the implementation of equipment or processes that are considered industry standard, the project is ineligible, as it is assumed this would have been implemented and is hence not incremental. If there are non-GHG benefits (for example, reduced hours required for maintenance, increases in operational efficiency etc.) compared to the planned activity in the business-as-usual or baseline scenario, describe these as well.
- Baseline GHG emissions: All projects are required to demonstrate how the project activities will result in material and direct GHG reductions in the GHG Workbook. Since the emission sources do not currently exist for projects at planned expansions, it is particularly important that applicants provide clear and substantial information to justify the existence and level of the baseline scenario’s GHG emissions in the absence of the project. The baseline scenario emissions are from sources that are currently planned for the expansion. Applicants must clearly explain why the project will not occur in the absence of funding and why the baseline scenario is planned instead. Refer to Part II of the GHG Estimation Guide for Projects on guidance to develop the baseline scenario.
- Eligible expenditures: Projects at expansions must not include costs required for the facility expansion itself in the project expenditures, but only include costs required to implement the project. However, the program will fund the full costs of the alternative option and not the difference between both options. For example, if a new building is added to a facility and the project proposes to install geothermal heating to replace the natural gas heating that was planned to support the expansion, the full cost of the geothermal heating may be included as an eligible expenditure, not the “incremental” cost relative to the natural gas heating. However, any costs associated with the construction of the building itself must not be included.
3.5.5 Electricity or Fuel Production for Own-Use
Projects producing electricity or low-carbon fuels must primarily do so for own-use, i.e., to offset the consumption of electricity or fuels at the project facility. Sale of excess electricity or fuel to the market is allowed, but a majority (more than 50%) of the energy content must be used within the facility’s own operations.
Electricity generating assets are expected to be located at or adjacent to the facility such that they may be considered “behind-the-fence” installations. Third parties may not construct electricity generating systems with the intention of selling electricity directly to the grid, regardless of the site of the assets. As such, ownership restrictions of the electricity generating assets may be applied on a case-by-case basis.
4. Funding Parameters and Project Expenditures
4.1 Minimum and Maximum Program Funding Amounts
The total amount of program funds available to be delivered in an eligible province is dependent on the amount of proceeds collected in a given compliance year for that jurisdiction. Applicants may only access the funds that are available in the province where their facilities are located.
Applicants may submit proposals for multiple projects. Please note that ECCC can only approve up to a total of $25 million of funding from the program per fiscal year cycle (from April 1 of any given year to March 31 of the following year) per recipient regardless of the number of projects submitted or which intake they submitted under. Each project submitted under the DIP 2.0 intake must request a minimum of $500,000 and a maximum of $25 million of funding toward eligible expenditures, while respecting the cost-share limits described below.
Please visit the Output-Based Pricing System Proceeds Fund for information on the amount of funding available in eligible provinces.
4.2 Cost-Sharing and Stacking Limits
The program may contribute up to 40% of the total eligible expenditures per project for all recipient types, including private for-profit organizations, universities, hospitals, public sector bodies and boards and not-for-profit organizations. The maximum level of assistance from all governmental sources of funding (including federal, provincial or territorial and municipal) is 75% of the total expenditures of the project.
Please note that stacking funding with the Low Carbon Economy Fund – Challenge is not permitted. Applicants can apply to both programs, but an individual project will not receive funding from both the program and the Low Carbon Economy Fund – Challenge.
4.3 Eligible Expenditures
Eligible expenditures are expenses considered by ECCC to be direct and necessary for the successful implementation of an approved project. Contributions will be made towards eligible expenditures directly related to eligible projects that, in the opinion of ECCC, are reasonable and required to achieve program objectives and outcomes. Eligible expenditures must be incurred between the date of notification of approval-in-principle and the project end date, which cannot be later than March 31, 2028. Expenditures incurred before or after these dates would be considered ineligible and cannot be reimbursed. Applicants should plan to start the project no earlier than April 1, 2024. Please note that any expenditures incurred before an agreement is signed with ECCC are at the applicant’s sole risk and expense.
Eligible expenditures include, but are not limited to the following:
- acquiring, constructing, rehabilitation and improvement of assets
- material and supplies
- professional fees for contracted services, such as accounting, communications, official languages translation, audit, GHG emission reductions and energy savings estimate verification, and results monitoring, measuring and reporting
- planning and assessment, such as surveying, engineering, architectural supervision, testing, and management consulting services. Canada will only contribute up to a maximum of 5% of its total contribution to the project towards these costs unless otherwise agreed to by Canada
- all capital expenditures, including site preparation and construction expenditures, only once ECCC is satisfied that the Government of Canada’s obligations, if any, related to the Impact Assessment Act, 2019 and the legal duty to consult with, and accommodate, Indigenous peoples have been met
- expenditures associated with performing activities related to the project by contractors
- licenses and permits
- renting or leasing of equipment related to the construction of the project
- training related to new technologies, equipment, software and systems
- engineering and environmental reviews, including costs related to an environmental or impact assessment, and the costs of mitigation measures, follow-up, and remedial activities identified in any environmental or impact assessment
- consultation of Indigenous groups, specifically project-related consultation activities arising as a result of the Government of Canada’s legal duty to consult, where applicable
- salaries and benefits for employees on the recipient’s payroll, for actual time spent by the employees on the projects.
- Canada will only contribute up to a maximum of 2% of its total contribution to the project towards these costs unless otherwise agreed to by Canada provided that:
- the recipient is able to demonstrate that it is not economically feasible to tender a contract and clearly demonstrate that there is value for money in using internal employees
- the employee is engaged directly in respect of the work that would have been the subject of the contract, and
- the arrangement is approved in advance and in writing by Canada
- joint federal communication activities (e.g. press releases, press conferences, translation) and project signage related to funding recognition
- travel expenditures (including the cost of accommodations, vehicle rental and kilometric rates, bus, train, airplane or taxi fares, allowances for meals and incidentals). Canada will only contribute up to a maximum of 5% of its total contribution to the project towards these costs unless otherwise agreed to by Canada. Of note, travel and per diem expenses cannot be more than the rates and allowances determined in the Travel Directive of the National Joint Council
- provincial/territorial sales tax, goods and services tax, or harmonized sales tax for which the recipient or a third party is not eligible for a rebate, and any other costs that are ineligible for a rebate
- other costs that, in the opinion of Canada, are considered to be direct and necessary for the successful implementation of a project and have been approved by Canada in writing prior to being incurred
Applicants must provide detailed budgetary and expenditure information in their application by completing the Work Breakdown Structure and Budget Workbook, available for download in PIMS.
4.4 Ineligible Expenditures
Certain expenditures are ineligible for funding; therefore, applicants must not include them in the calculation of the total eligible expenditures of the proposed project. All expenditures incurred prior to notification of approval-in-principle or after the project’s end date (no later than March 31, 2028) are ineligible for funding. Applicants can choose to, at their own risk, initiate early steps required to implement the project such as applying for permits prior to notification of approval-in-principle. This undertaking would not affect the eligibility of expenditures as long as contracts are only signed after notification of project approval-in-principle. However, this may impact the eligibility of your project as it can indicate that the project is already underway (please see section 3.5.3 for eligibility considerations). Any expenditures related to contracts signed prior to this date would be ineligible for reimbursement.
Ineligible expenditures include, but are not limited to:
- expenditures related to developing a business case or proposal for funding
- any expenditures related to a contract signed prior to notification of approval-in-principle
- expenditures related to purchasing and leasing land, buildings, other facilities, associated real estate and other fees, vehicles and equipment other than equipment other than equipment directly required for the construction of the project
- financing charges and interest payments on loans, including those related to easements and servitudes (e.g. surveys)
- amortization of unrealized appreciation of assets and depreciation of assets
- interest, penalties and fines
- allowance for interest on invested capital, bonds, debentures, bank, or other loans together with related bond discounts and finance charges
- legal fees
- costs of renting or leasing of equipment, except those specified as eligible expenditures
- furnishing and non-fixed assets which are not essential for the operation of the project
- expenditures associated with operating expenses and regularly scheduled maintenance work
- provisions for contingencies
- premiums for life insurance on the lives of officers and/or directors
- any goods and services which are received through donations or in-kind contributions
- any business expenses, including but not limited to: advertising and promotion (non-program/project specific), bank charges (non-program/project specific); computer maintenance expenses; insurance, memberships and subscriptions; rent and utilities, repairs and maintenance expenses; other indirect type of expenditures relating to the organization’s office(s)
- all capital costs, including site preparation and construction costs, until Canada is satisfied that Canada’s obligations, if any, related to applicable federal environmental assessment or impact assessment legislation and agreements between Canada and Indigenous groups, and the legal duty to consult with, and accommodate, Indigenous groups have been met
- provincial/territorial sales tax, goods and services tax, or harmonized sales tax for which the recipient or a third party is eligible for a rebate, and any other costs eligible for rebates
- increase in compensation for officers and employees
- entertainment expenses
- dues and other memberships
5. Project Considerations
To be considered for funding, applicants will be required to identify any potential impacts that their proposed project may have on Indigenous rights and/or environmentally sensitive areas in their application.
5.1 Duty to Consult
The Government of Canada may have a legal duty to consult with, and if applicable, accommodate, Indigenous peoples when it contemplates conduct that might adversely impact Indigenous or treaty rights. These rights include, but are not limited to, the right to hunt, fish, and practice traditional activities and ceremonies. ECCC will assess potential impacts of projects on these constitutionally protected Indigenous and treaty rights to ensure that those affected are properly notified, consulted and, where required, accommodated.
While the duty to consult is an obligation that rests with the Crown, the Government of Canada will expect funding recipients under the program to carry out certain procedural aspects of consultation on a proposed project, where appropriate (e.g. providing notification letters to, and organizing consultation sessions with, Indigenous communities that will be affected by the proposed project).
5.2 Impact Assessment
Depending on where a project is located, applicants may be required to complete an impact assessment(s) prior to undertaking certain activities. Applicants are responsible for determining whether their project may require an assessment under the federal Impact Assessment Act, and ensuring the assessment is completed. Please note that federal and provincial assessment obligations may be different. In cases where more than one level of government needs to assess project impacts, the Act allows for cooperation and coordinated action between jurisdictions with the objective of “one project, one assessment”. If you are unsure of your responsibilities, please consult your provincial/territorial government and/or the Impact Assessment Agency of Canada’s Basics of Impact Assessments for more information.
5.3 Job Estimates
At the application stage, applicants will be required to provide ECCC with details on the jobs created as a result of their proposed project. The estimates are mandatory for program reporting and successful applicants will be required to provide updated estimates of jobs created as a result of this project, from project start to completion. When completing the Application Form, applicants must provide two types of job estimates for the project:
- Project implementation jobs: new and direct full-time equivalent (FTE) jobs that are anticipated to result from implementation of the project (e.g. engineering, procurement, construction, installation, commissioning, and related jobs).
Annual change in jobs: the average change in FTE jobs per year expected to occur at the facility after the project is complete (e.g. changes to ongoing operational and maintenance jobs). Please note that the change in jobs at the facility may be negative or positive.
To ensure these estimates use a comparable approach, please use the following guidance and provide relevant methodological details in the Application Form.
- Direct jobs are those that are new and directly paid for by the applicant in order to implement the project. For example, jobs that are created directly at your own company or contractors hired to implement the project should be counted towards this estimate. These jobs should also align with jobs associated with eligible expenditures for the project.
- Indirect jobs should not be included in these estimates. For example, if you are purchasing a new piece of equipment needed for your project, the jobs created to manufacture the new equipment should not be included in your job estimates.
- FTE is calculated by the total hours worked divided by average annual hours worked in full-time jobs (e.g. 40 hours x 52 weeks = 2,080 hours). The exact hours for each full-time job should be appropriate for your organization and the relevant jobs. Part-time jobs (or jobs that only are related to this project for part of a year) should be counted proportionally towards total FTEs.
6. Application Process
ECCC is committed to a consistent, fair, and transparent process to identify, select, and approve the allocation of funding to projects that best fit the objectives of the program.
Application process: OBPS Proceeds Fund – Decarbonization Incentive Program
Step 1: Review applicant guide.
Step 2: Prepare Application form in PIMS
Step 3: Submit application during application intake August 8, 2023, to October 6, 2023
Step 4: Application assessment.
Step 5: Application selection.
Step 6: Application notification (approval-in-principle or rejection).
Step 7: Funding agreement negotiation if application successful.
6.1 Application Period
Applications will be accepted during the DIP 2.0 intake period from August 8, 2023 to October 6, 2023. Please visit the Output-Based Pricing System Proceeds Fund for available funding for each jurisdiction.
Selection of projects for funding will be based on eligibility criteria and the competitive evaluation of applications using merit criteria. For more details on program eligibility requirements please see Section 3 of this Guide. For more details on merit criteria for the program, please see Section 7.
6.2 Submitting an Application
Applications will be accepted online through ECCC’s Program Information Management System (PIMS), accessible through the Single Window Information Management (SWIM) system login. Please visit Reporting through Single Window: Environment and Climate Change Canada for instructions on how to register in SWIM and consult the Application Form Walkthrough before completing the online Application Form.
Applicants must include answers to all mandatory questions in the Application Form, provide proof of ownership or a declaration of written authority that the applicant has permission from the owner to undertake the project, and complete two mandatory Excel workbooks. These workbooks are available for download through PIMS:
- GHG Workbook: the required template to provide GHG emissions reduction estimates
- Work Breakdown Structure and Budget Workbook: the required template to provide project workplan, budget, and funding request calculations.
Note that the GHG and Work Breakdown Structure and Budget Workbooks have been updated since the last intake and applicants should download the most recent version available in the Templates and Guidance section of the Application Form before submitting a project as part of the DIP 2.0 intake.
The essential information should be provided in response to application questions in the Application Form or contained in the workbooks as required. Applicants may also provide supplementary material to support components of their application, but this content will not be necessarily reviewed in detail.
Eligible applicants must submit a separate application for each project they wish to have considered for funding. There are no limits to the number of applications that can be submitted by an eligible applicant. Please note that ECCC can only approve up to a total of $25 million of funding per fiscal year cycle (from April 1 of any given year to March 31 of the following year) per recipient regardless of the number of projects the applicant has submitted or which intake they were submitted under.
For an example, please see table below where a recipient has projects approved in both the first intake (DIP 1.0) and second intake (DIP 2.0). Note that the total funding for all projects must not exceed $25 million per fiscal year cycle.
|DIP 1.0 project||$3M||$1M||$5M||$1M|
|DIP 1.0 project||$1M||$2M||$6M||$1M|
|DIP 2.0 project||-||-||$14M||$11M|
Please note that ECCC may seek applicants’ permission to direct their applications to alternative Government of Canada funding sources and opportunities for consideration.
7. Application Assessment & Project Selection
Priority will be given to projects that result in meaningful GHG emissions reductions and support long-term decarbonization of the relevant OBPS covered facility or sector. The assessment of projects consists of three key steps: 1) Eligibility Screening, 2) Merit Evaluation, and 3) Project Selection. Applications will be assessed after the intake closes. For further information and instructions on how to complete the online Application Form, please consult the Application Form Walkthrough.
7.1 Eligibility Screening
Applications will be reviewed to confirm that:
- all elements of the application (including GHG Workbook and Work Breakdown Structure and Budget Workbook) have been filled in correctly and are complete
- the applicant, facility, and all project activities are eligible for funding
- the project is incremental to existing or required projects
- the requested funds follow the program’s funding parameters
ECCC may contact applicants during the assessment process to clarify application details. It is the responsibility of the applicant to provide comprehensive, clear, and complete information when submitting their application. If the application does not meet program eligibility criteria, it will not be assessed further, and the applicant will be notified of the reason(s) for rejection.
7.2 Merit Evaluation
The merit of each project will be evaluated by a cross-disciplinary review committee, comprised of technical and program experts from ECCC and other federal departments. Each project will be scored out of 100 points based on a combination of the following elements:
- GHG emissions reductions (80% of total project score)
- Funding requested from the program per tonne of carbon dioxide equivalent reduced in the year 2030 (50% of total project score)
- The approximate percentage by which the project will reduce the facility’s annual GHG emissions in 2030 (30% of total project score)
- Net-Zero 2050 Alignment (10% of total project score)
- The degree of alignment with net-zero and the role of the project in the facility’s long-term decarbonization pathway
- Co-benefits (10% of total project score)
- Non-GHG benefits such as benefits to clean growth, the environment, Indigenous leadership, and health and safety
In addition, risk and risk mitigation measures will be assessed and projects with high level of risk and insufficient risk mitigation strategies may be rejected for funding. See Section 7.3 for more information on project selection.
7.2.1 GHG Emissions Reductions
GHG emissions reductions estimates will be evaluated to ensure they meet the standards laid out by ECCC. These standards are described in detail in the GHG Estimation Guide for Projects, available for download along with the mandatory GHG Workbook in PIMS. The GHG Workbook will support the estimation of the annual and cumulative GHG reductions for each project, as well as energy savings (if applicable for the project). Note that the GHG Workbook and guide have been updated since the last intake and applicants should download the most recent version available in the Templates and Guidance section of the Application Form for the DIP 2.0 intake.
ECCC will evaluate the methodology used to prepare GHG estimates, along with an assessment of assumptions used, supporting calculations, level of uncertainty and conservativeness. ECCC reserves the right to modify GHG emissions estimates provided by applicants, either through clarification with applicants or unilaterally, in order to ensure these metrics are comparable between projects.
Scores awarded to these criteria will depend on the cost-effectiveness of the 2030 GHG reductions and the approximate percentage by which the project will reduce the facility’s annual GHG emissions:
- The federal cost-effectiveness of a project accounts for 50% of the total score that can be awarded to a proposal and is calculated as funding requested from the program per tonne of carbon dioxide equivalent (CO2e) reduced in the year 2030 ($/tCO2e), or 2030 federal cost-per-tonne. A federal cost-per-tonne of $300/tCO2e and under is considered very good. A federal cost-per-tonne of $2,500/tCO2e is considered very poor and is highly unlikely to be recommended for funding, even if the project meets other merit criteria.
- The reduction in the facility’s annual GHG emissions accounts for 30% of the total score that can be awarded to a proposal and is the percentage by which the project will reduce the facility’s annual GHG emissions and is calculated based on the facility’s GHG emissions for the most recent reporting period and GHG emissions reductions from the project in 2030. A reduction in the facility’s annual GHG emissions of 50% or more is considered excellent. If a project does not impact the facility’s annual GHG emissions (e.g., if the project does not reduce emission sources that the facility reports on), the project can still score well in GHG merit if they have strong federal-cost effectiveness.
Please provide the most current facility GHG emissions in Section 1.5 of the GHG Workbook to ensure your project can be assessed on this criterion.
7.2.2 Net-Zero 2050 Alignment
To support the Government of Canada’s long-term target of reaching net-zero emissions by 2050, ECCC will evaluate the degree of a project’s alignment with net-zero and seek to understand the broader role of the project in a long-term decarbonization pathways. A project’s alignment with net-zero by 2050 can boost the overall merit of a project. As such, several questions have been included in Section 4 of the Application Form to support this analysis.
Net-zero 2050 alignment accounts for 10% of the total score that can be awarded to a proposal. To score well, applicants must clearly demonstrate how their project is aligned with the five net-zero 2050 indicators outlined below. The clarity of information provided, the level of certainty, and the justification for assumptions used to make estimates (if applicable) will impact the assessment.
- Degree of decarbonization: ECCC will assess the likely degree or percentage of decarbonization achieved by the project, for the scope of emissions it aims to reduce. To achieve this, applicants should quantify or provide a qualitative description of the degree of decarbonization relative to a baseline. For example, fuel switching from natural gas to low-emitting grid electricity to operate the equipment would represent complete decarbonization of that source of emissions, even though the project’s impact on the facility’s overall annual emissions may be minor.
- Enabling steps to net-zero by 2050 and net-zero plans: ECCC will assess the degree to which the project is an enabling step on a pathway to net-zero emissions for the facility. That is, whether the project will directly enable future decarbonization for the relevant scope of emissions. Applicants can describe links between the project and any overarching net-zero or climate mitigation plan or describe how the project supports the organization reaching net-zero emissions by 2050.
- Carbon lock-in and stranded assets: ECCC will assess the likelihood that the project would lead to carbon lock-in which will be assessed to determine whether the project creates barriers to further decarbonization by increasing the cost or difficulty of subsequent retrofits. ECCC will also assess the likelihood that the project may install components that may become stranded assets, if project components are not compatible with net-zero 2050.
- Best available technology and practices: In the case that projects do not represent complete decarbonization and/or may lead to carbon lock-in or stranded assets, ECCC will consider if the project still represents the best available technology or practice to reduce the relevant scope of GHG emissions. If this is the case, applicants must provide sufficient justification for the choice of technology, outline the barriers to more complete decarbonization, and describe why the proposal represents the best alternative of those currently available.
- Scope 3 emissions: ECCC will qualitatively assess projects for the likely impact on Scope 3 (upstream and downstream) emissions. Some projects may lead to increases in Scope 3 emissions that outweigh direct emissions reductions. This will reduce the net-zero alignment of the proposal. If a project is expected to lead to Scope 3 emissions reductions this will improve the net-zero alignment of the proposal. Note that the information requested is only expected to enable a qualitative estimate of the relative magnitude and direction of Scope 3 emissions and ECCC will not carry out a lifecycle assessment of the project’s Scope 3 emissions.
The program recognizes that non-GHG benefits or “co-benefits” aligning with federal priorities and program objectives can occur as a result of the projects and can boost the overall merit of a project. As such, applicants are to identify whether projects will result in other environmental, social, or clean growth benefits outlined in the five co-benefit categories below and in Section 5 of the Application Form.
Co-benefits account for 10% of the total score that can be awarded to a proposal. For each co-benefit identified for a project, applicants will be asked to provide justification for how the project will result in that benefit with information that is quantifiable (to the extent possible) and verifiable. Where quantitative information is not available, qualitative information should be provided. If applicable, relevant supporting documents can also be attached; however, complete answers must be provided in the Application Form to ensure the co-benefit is assessed.
For a co-benefit to score well, it must meet the following requirements:
- The co-benefit, its impact, and how the project will achieve it, has been comprehensively described. This description must include information that is quantitatively or qualitatively verifiable.
- The co-benefit is directly linked or attributable to the proposed initiative (i.e., the co-benefit will occur because of the proposal).
- The impact of the co-benefit is meaningful and robust.
For additional guidance and examples on what information to provide on each co-benefit, please consult the Application Form Walkthrough of this Guide.
To assist applicants in providing responses to any of the five co-benefits in the Application Form, the following guidance for each scored co-benefit is provided below.
- Clean growth collaboration: The project will create partnerships with clean growth firms, industry organizations or researchers. Describe any significant collaborations with external partners such as co-design, co-development, co-implementation. If applicable, include Letters of Intent, Memoranda of Understanding, etc. to confirm their collaboration.
- Industry leading clean growth practices: The project involves industry-leading technologies or practices which are those that implement the highest current performance level in technologies or practices or are novel for the sector. Describe the novel technology or practice and why it would be considered industry leading. If the project has the ability to influence/encourage facilities and/or organizations within the sector to undertake similar projects, describe the potential for replicability.
- Indigenous climate leadership: The project will support Indigenous communities or organizations as climate leaders. Identify the Indigenous communities or organizations involved in the proposal and the status of their participation. Describe how the proposal will promote Indigenous climate leadership (for e.g., the initiative may promote collaboration across multiple indigenous organizations.)
- Environmental: The project will result in other environmental benefits (excluding GHG reduction benefit). These can include:
- Air quality – The project leads to a reduction of air pollution (other than GHGs) by reducing pollutants classified as criteria air contaminants (e.g., nitrogen oxide, particulate matter). Describe the air pollutant(s) being reduced, how your project will reduce them, and provide estimates of both the level of reductions and the percentage reductions for your overall facility or operation’s emissions to illustrate significance.
- Waste and resource management – The project will improve waste and/or resource management. Describe how the project will result in any of the following impacts: less waste sent to landfills, reuse of any by-products that would otherwise be wasted, optimize/reduce use of water, reduced maintenance frequency or redundancy.
- Health and safety: The project will improve the health and safety of the workplace environment, such as positive impacts on indoor air quality, noise level, repetitive motion, temperature, etc. Describe how these impacts are obtained and their workplace benefits.
7.2.4 Risks and Risk Mitigation Measures
Applications will be evaluated for project and applicant risks. Applicants will be required to provide information on organizational and financial capacity, project design complexity, and workplan feasibility, identifying associated risks and accompanying risk mitigation strategies. Applications with an elevated level of risk and insufficient mitigation measures may be rejected or subject to additional monitoring and reporting requirements. Projects will be reassessed for risk level on a periodic basis after a funding agreement is signed. Note that these criteria are not scored but risk and risk mitigation measures will be assessed as part of the merit evaluation and impacts project selection (i.e. projects with high level of risk and insufficient risk mitigation strategies may be rejected for funding).
7.3 Project Selection & Notification
It is the responsibility of the applicant to provide comprehensive, clear and complete information. It should be assumed that applications will be reviewed as submitted only. Once the merit evaluation is completed, projects will be ranked and funding recommendations will be made considering a project’s merit against other projects in the same jurisdiction, until funding is depleted in that jurisdiction. Formal recommendations will be made to the Minister of Environment and Climate Change for project approval and funding decisions.
How can I improve the likelihood of my project being selected?
Under the previous intake (DIP 1.0 intake), projects were assessed for merit on a rolling, case-by-case basis, and those meeting program thresholds for merit were recommended for funding until funding was depleted in that jurisdiction.
This intake (DIP 2.0 intake) is a single intake that is competitive, and projects will be scored and ranked against other projects in the same jurisdiction until funding is depleted in that jurisdiction. To enhance the competitiveness of your project against others, obtaining facility GHG reductions that are also cost-effective can result in scoring high points, as these make up 80% of the total score awarded to proposals. For example, after evaluation, if a project’s federal 2030 cost-per-tonne (CPT), which is defined as funding requested from the program divided by in 2030 GHG emissions reductions, is less than $150/tCO2e and the project reduces the facility’s overall annual emissions by over 55%, the proposal will obtain close to the maximum points that can be awarded in this criterion, making it competitive.
Scoring maximum points on net-zero alignment and co-benefits can improve your chance of selection, as it boosts your project’s overall scores, especially if your project is not as cost-effective (e.g., CPT greater than $500/tCO2e) and has minor impact (between 10%-20%) on the facility’s overall emissions.
Proposals that have a CPT greater than $1,000/tCO2e, marginally reduce the facility’s annual emissions (less than 10%), have low net-zero alignment and no co-benefits are highly unlikely to be recommended for funding. In addition, proposals that have a very high CPT (i.e., $2,500/tCO2e and over), are also highly unlikely to be recommended for funding, even if the project meets other merit criteria.
Ultimately, the likelihood of your project being selected will depend on the merit of your project ranked against other submitted projects, as well as the amount of funding available in your jurisdiction.
ECCC will notify both successful and unsuccessful applicants once a decision has been made. If a project is approved for funding, ECCC will issue a notification of approval-in-principle by email that indicates next steps toward signing a funding agreement. Please note that an approval-in-principle does not guarantee funding for the project; the signing of a funding agreement is the final step in the project approval process.
Funding may be subject to certain conditions, such as the completion of an environmental assessment, regulatory authorizations/permits, Crown-Indigenous consultation, or other commitments.
8. Funding Agreements & Reporting
8.1 Funding Agreements
Federal contributions to selected projects are contingent on the signing of a legally binding funding agreement between the Government of Canada and the successful applicant. Project selection itself is not a guarantee that federal funding has been finalized, and applicants assume the responsibility for any project expenditures incurred between notification of approval-in-principle and the signing of an agreement with the Government of Canada.
The signing, or execution, of a funding agreement by both parties is the final step in the project approval process. The agreement will state the terms and conditions under which the Government of Canada will provide funding for the project. As approval will be based on the details provided in the application, the funding agreement will be drafted based on the scope of work and eligible funding request provided in the application. As such, ECCC will work with successful applicants to ensure that the project is appropriately represented in the funding agreement. It is therefore crucial to clearly define the scope of the project in the application since the recipient will be responsible for:
- completing the project according to the defined scope and within the timelines in the application
- covering any expenditure overruns above the budget identified in the application
- covering all expenditures associated with work performed outside the approved scope
Failure to finish the project within the agreed upon timelines of the funding agreement may result in, including, but not limited to: a corresponding reduction of federal funding, reclaiming of funds, and/or termination of the funding agreement. Expenditures incurred for projects that are cancelled or withdrawn are ineligible for reimbursement.
Multi-year agreements will establish a funding amount per fiscal year adding up to the total contribution under the agreement. Payments will be subject to ECCC’s review and approval of the required progress report to be submitted with each claim.
8.2 Standard Reporting Requirements
Recipients will be required to provide progress reports on work completed to date at specific intervals that include, at a minimum, progress towards project implementation and up-to-date GHG reductions estimates, including whether any assumptions used to estimate GHG emissions have changed. The recipient may also be required to report on any changes to risks and co-benefits of the project.
Progress reports will be required at least twice a year, and must accompany any claims. In addition, recipients will be required to submit documentation within three months of the end of the project, including a completion report, and an attestation that federal cost-shared projects have been completed and funds have been spent on eligible expenditures.
Detailed reporting requirements will be outlined in the funding agreement. Reporting guidelines will be provided to recipients to clarify expectations in advance of the first submission deadline.
8.3 Performance Reporting
In order to improve ECCC’s understanding of the long-term GHG outcomes of projects funded through the program, applicants will be requested to submit performance data. Data will be collected through a performance report to be submitted after the project has been in operation for an amount of time agreed upon in the funding agreement by both parties.
The objective of a performance report is to determine how expected outcomes may have evolved after a project has been completed and is in operation. As such, projects that are straightforward and have low uncertainty regarding operational parameters or other assumptions affecting GHG emissions reduction estimates will not be asked to provide performance reports post-completion. Projects with significant sources of uncertainty that can only be resolved post-completion will be required to submit performance reports. The requirement of a performance report will depend on an assessment of uncertainty of outcomes at the application stage, prior to implementation of the project.
At a minimum, performance reports will require:
- updated technical information, such as operational efficiencies
- final updates to any time-dependent variables, such as hours of operation of key equipment
- corresponding updates to the GHG emissions reductions estimates
Details regarding performance report requirements will be specified in the funding agreement.
9. Claims, Audit & Evaluation
The funding agreement will lay out the process for submitting a claim and reports, and outline audit and evaluation requirements. ECCC will monitor activities, conduct audits and evaluations and seek information on project results.
9.1 Submitting a Claim and Payment of Funding
Recipients will be required to submit their claims for eligible expenditures through PIMS. These expenditures must be incurred on or after the date of notification of approval-in-principle and before the project end date, which cannot be later than March 31, 2028. Recipients will have a three-month window following project completion to submit a final claim to ECCC for reimbursement.
With each claim, funding recipients will be required to submit progress reporting and proof of payment that provides an accounting of expenditures incurred and permits ECCC to confirm that expenses incurred are eligible. Original receipts and invoices issued to the recipient within the eligible period are required as proof of payment. Invoices must contain a breakdown of expenditures and work completed that can be matched against the project as detailed in the funding agreement. Guidelines will be provided to recipients to clarify reporting expectations in advance of the first submission deadline.
Payments will be made following review and approval of progress reports and claims. The basis of payment will be detailed in the funding agreement. Please note that Canada may withhold up to 10% of its funding to be paid out once a final reconciliation of all claims and payments is jointly completed by both parties at the end of the project.
The recipient shall inform ECCC of changes to the nature of the project throughout the life of the agreement, including changes to the legal status of the recipient, in order for ECCC to reassess eligibility. Failure to do so may result in expenditures being deemed ineligible and/or the termination of the funding agreement.
9.2 Audit and Evaluation
9.2.1 Site Visits
ECCC representatives, other Government of Canada employees or external experts hired by the Government of Canada may require access to the site or facility premises where funded projects and activities are taking or have taken place. Recipients will be expected to grant access to Government of Canada employees or their representatives upon request. Such visits ensure that projects for which funding is approved are being carried out or implemented in accordance with the funding agreement.
Program recipients may be subject to an audit carried out by a professional auditing firm retained by ECCC. Recipients selected for audit will receive notification in advance. Recipients shall provide reasonable and timely access to project sites and/or facilities at no cost, as well as any project-related documentation for the purposes of the audit.
9.2.3 Program Evaluation
ECCC may conduct an evaluation of its program. Recipients may therefore receive a request to provide performance-related information to ECCC’s evaluator or to respond to a questionnaire to support the evaluation.
10. Privacy and Confidentiality
The information provided by an applicant in their application and in any other form will be used by the Government of Canada for the review, evaluation and selection of applications under the program. The information may also be used to confirm past federal funding sought by the applicant.
Federal government institutions are bound by the requirements of the Access to Information Act and the Privacy Act, as well as the Library and Archives Canada Act. These laws apply to the use, disclosure and retention of information (such as personal, confidential or other) under the control of federal government institutions.
Applicants should note that ECCC may consult and share the information provided in applications with other federal government institutions for the purpose of assisting ECCC with project review and evaluation, determining eligibility under other federal government programs, and confirming past federal funding sought by an applicant. With applicant’s permission, ECCC may also use and disclose the information to external experts (e.g., scientific, technical, financial, marketing, or commercialization), hired by the Government of Canada under contract with confidentiality obligations, for the purpose of assisting ECCC with project review and evaluation and/or determining eligibility under other federal government programs.
In submitting an application, applicants are consenting to such uses, sharing and disclosures of the information for the purposes described above. Applicants are invited to clearly identify in their application the provision of any information that contains trade secrets, is confidential or that if disclosed, could reasonably be expected to result in material financial loss or gain to, or to prejudice the competitive position of, a third party, or, to interfere with contractual or other negotiations of a third party, as outlined in Section 20 of the Access to Information Act. Once a funding agreement is signed, the name of the successful applicant, location, date of approval, the funding amount, and the project description may be proactively disclosed to the public.
11. Service Standards
ECCC has established the following service standards to ensure the accurate and timely delivery of the application phase of the program. ECCC will make every effort to:
- acknowledge the receipt of an application within 1 business day
- reply to general inquiries within 5 business days
- notify applicants of their application results within 120 business days of the colsure intake date
- provide selected applicants with a formal funding agreement template within 10 business days of the notification of their approval-in-principle
Annex A: Definitions and Acronyms
- A specific action or intervention targeted at changing GHG emissions, removals, or storage. It may include modifications to existing production, process, consumption, service, delivery or management systems, as well as the introduction of new systems.
- Any real or personal property or immovable or movable property acquired, purchased, constructed, rehabilitated or improved, in whole or in part, with funds contributed by Canada under the terms and conditions of this program.
- Avoided Emssions
- Avoided emissions are described as a decrease in greenhouse gases (GHGs) from a future source and are seen as GHGs avoided as a result of implementing low-to-zero emitting equipment, technology or processes instead of what is planned.
- Baseline scenario
- A reference case used to determine the baseline GHG emissions for a project activity. It is a description of what would most likely occur in the absence of the proposed project. Also referred to as the “business-as-usual" scenario.
- Behavioural change
- An ineligible project type whose primary objective is the reduction of GHG emissions through incenting or modifying conscious human actions.
- Capacity building
- An ineligible project type that results in the development and enhancement of human and institutional resources, which does not directly result in measurable GHG reductions.
- Carbon dioxide equivalent (CO2e)
- The mass of carbon dioxide that would result in the same global warming impact as an equivalent mass of another greenhouse gas. The carbon dioxide equivalent is calculated, for this program, by multiplying the mass of the greenhouse gas by its corresponding 100-year global warming potential from the Fourth Assessment Report from the United Nations Intergovernmental Panel on Climate Change.
- Commercially available
- Currently available for purchase in the market. Technologies that are commercially available usually correspond with a level 8 or above on the Technology Readiness Level (TRL) Scale.
- The ratio of funding requested from the program per tonne of carbon dioxide equivalent (t CO2e) reduced in 2030 (2030 federal cost-per-tonne). The cost-per-tonne determines the federal cost-effectiveness of GHG emissions reductions.
- Eligible Expenditures
- Project expenditures considered by ECCC to be direct and necessary for the successful implementation of an eligible project. For more details please refer to Section 4 of this guide.
- Feasibility study
- An analysis of the economic, technical, scheduling, legal, and other considerations of a potential project to determine if it is likely to be successful.
- Funding agreement
- A written agreement between the Government of Canada and a recipient governing the terms and conditions associated with receiving funding.
- Greenhouse gas (GHG)
- The seven gases or categories of gasses recognized by the United Nations Framework Convention on Climate Change (UNFCCC) for their contributions to the greenhouse effect: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).
- Incremental GHG emissions reductions
- GHG emissions reductions are incremental if they will be achieved in addition to what would occur in the business-as-usual scenario and under existing policies by-laws, rules, regulations or codes.
- Material GHG reductions
- GHG emissions reduction results that are tangible, measurable, achievable, and sizeable enough to contribute towards Canada's GHG reduction targets relative to project size and scope.
- Refers to energy or fuel that is produced and used within the organization’s own operations. See Section 3.5.5 of this Guide for a description of the eligibility requirements regarding own-use.
- The set of activities for which funding is being requested in an application.
- A recipent is a single facility that is or has beem a covered facility under the OBPS.
- Retrofits are changes to an existing building, facility, or asset that seek to renovate, upgrade, replace or repair aspects of the building or asset in a manner that improves environmental outcomes.
- The broad sector in which the facility operates. Ideally should be specified by NAICS code. E.g. iron & steel production, utilities, food processing, auto manufacturing.
- Acquiring more than one source of federal, provincial, and/or municipal financial assistance through contributions, whether provided by one or multiple government departments or agencies.
- Standalone Educational project
- An ineligible project type that seeks only to educate, generate knowledge, or promote awareness, which does not directly result in measurable GHG reductions.
- Technology Readiness Level scale (TRL)
- A scale that rates technological maturity based on its status from inception to commercially available. This tool helps determine TRL level (Technology Readiness Level (TRL) Assessment Tool).
Activity Type Definitions
- Building envelope upgrades (insulation, windows, doors)
- The replacement or restoration of a building’s envelope or shell. This includes all activities that improve the airtightness or insulation of the building. Note that upgrades to heating or cooling equipment are generally considered stationary equipment retrofits.
- Carbon Capture and Storage
- Technologies that energy/emission-intensive industries implement to remove CO2 emissions from their point source (capture), followed by the permanent storage of CO2 underground by injecting it into rock formations (storage).
- Carbon Capture and Utilization
- Technologies that energy/emission-intensive industries implement to remove CO2 emissions from their point source (capture), followed by the conversion of this carbon to fuels or carbonate minerals through mineralization processes with higher conversion efficiency and lower energy requirements, compared to incumbent technologies (utilization).
- Clean electricity production for own use
- The generation of electricity from renewable sources to offset the consumption of electricity from non-renewable sources. Common examples of renewable energy include solar, wind, hydro, and biomass. Electricity production projects must meet the “own-use” requirement as defined in Section 3.3.5 of this Guide.
- District energy and/or heating
- Heating and/or cooling networks in which multiple buildings are connected to a central heating/cooling plant. District energy and/or heating systems for new industrial or residential buildings are ineligible.
- Heat recovery
- The capture of residual heat from a process for use elsewhere. E.g., the capture of heat that would otherwise be wasted from an industrial process to pre-heat a secondary process or to provide space heating.
- Industrial process changes
- Changes to industrial processes that release non-energy related GHG emissions, such as manufacturing processes that release CO2 through chemical reactions. These processes include the production and use of mineral products, metal production, or chemical production.
- Industrial product use changes
- Changes in GHG emissions from the use of products in an industrial process that does not involve a chemical or physical reaction. This includes emissions from the production or consumption of sulfur hexafluoride (SF6), nitrogen trifluoride (NF3), hydrofluorocarbons (HFCs), and perfluorocarbons (PFCs).
- Low-carbon fuel production for own use
- The production of a fuel that when used has significantly lower carbon emissions than that of traditional fuels. Low-carbon fuel production projects must meet the “own-use” requirement as defined in Section 3.3.5 of this Guide.
- Mobile equipment retrofits for energy efficiency
- The replacement or upgrade of existing vehicles or their onboard systems for the purpose of increasing their energy efficiency. This can include cars, trucks, planes, trains, excavators, or any other such vehicle.
- Mobile equipment retrofits for fuel switching
- The replacement or upgrade of existing vehicles or their onboard systems for the purpose of switching the energy/fuel on which they operate. This can include cars, trucks, planes, trains, excavators, or any other such vehicle.
- Organics diversion
- The diversion of organic materials from the landfill to another controlled environment such as a composting facility or an anaerobic digester, which will prevent the release of greenhouse gases (primarily methane) as they decompose.
- Stationary equipment retrofits for energy efficiency
- The replacement or upgrade of existing mechanical or electrical systems for the purpose of increasing their energy efficiency. Stationary equipment refers to those systems that remain fixed in a single location throughout the course of its operation. Common examples include boilers, pumps, and compressors.
- Stationary equipment retrofits for fuel switching
- The replacement or upgrade of existing mechanical or electrical systems for the purpose of switching the energy/fuel on which they operate. Stationary equipment refers to those systems that remain fixed in a single location throughout the course of its operation. Common examples include boilers, pumps, and compressors.
- Carbon dioxide
- Carbon dioxide equivalent
- Decarbonization Incentive Program
- Environment and Climate Change Canada
- Greenhouse gas
- Output-Based Pricing System
- Single Window Information Management
- Program Information Management System
- Technology Readiness Level
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