Output-Based Pricing System

Under the Greenhouse Gas Pollution Pricing Act, the federal carbon pollution pricing system has two parts:

  • a regulatory charge on fuel (federal fuel charge)
  • a regulatory trading system for industry – the federal Output-Based Pricing System (OBPS)

The federal OBPS is designed to ensure there is a price incentive for industrial emitters to reduce their greenhouse gas emissions and spur innovation while maintaining competitiveness and protecting against carbon leakage.

On this site, you will find information about the OBPS.

Important notice: The deadline for submitting annual and verification reports related to the 2019 compliance period has been postponed from June 1, 2020 to October 1, 2020.

On May 31, 2020, amendments to the Output-Based Pricing System Regulations came into force that postpone the deadline to submit annual reports and associated verification reports for the 2019 compliance period from June 1, 2020 to October 1, 2020. Compensation deadlines for the same compliance period have also been postponed. Please see the Regulations Amending the Output-Based Pricing System Regulations for further information.

Overview

Legislation and Regulations

The Output-Based Pricing System Regulations (OBPS Regulations), established under Part 2 of the Greenhouse Gas Pollution Pricing Act, were published in the Canada Gazette, Part II, on July 10, 2019. They apply in jurisdictions listed on Part 2 of Schedule 1 of the Greenhouse Gas Pollution Pricing Act (backstop jurisdictions). The Department also published a Notice of Intent on December 20, 2018, that allowed the OBPS Regulations to take effect on January 1, 2019, except in Yukon and Nunavut where they took effect on July 1, 2019, prior to the their final publication.

On May 31, 2020, amendments to the Output-Based Pricing System Regulations came into force that postpone the deadline to submit annual reports and associated verification reports for the 2019 compliance period from June 1, 2020 to October 1, 2020. Compensation deadlines for the same compliance period have also been postponed.

The due dates in the following two documents do not reflect the recent changes to the reporting and compensation deadlines related to the 2019 compliance period.

Overview of OBPS Regulations (PDF)

Overview of OBPS Regulatory Requirements for certain sectors (PDF)

Return of OBPS Proceeds

Proceeds from the OBPS in backstop jurisdictions will be returned to the jurisdiction of origin. The federal government published a paper to seek input to inform the approach to returning OBPS proceeds. The comment period is now closed. Further information will be available in 2020.

Use of proceeds from the federal Output-Based Pricing System

Fuel charge

The fuel charge component of the federal carbon pollution pricing system is administered by the Canada Revenue Agency.

Further information on the fuel charge.

Historic Documents

Registration

Who must apply to register?

Under section 171 of the Greenhouse Gas Pollution Pricing Act, a person responsible for a covered facility must apply for registration of that facility in the Output-Based Pricing System (OBPS). A facility that is in a backstop jurisdiction and meets the criteria set out in section 8 of the Output-Based Pricing System Regulations (OBPS Regulations) is a covered facility.

When there is more than one responsible person for a facility, requirements of the Greenhouse Gas Pollution Pricing Act and its regulations apply to each responsible person. However, compliance by any one of the responsible persons will satisfy the obligations. As such, one responsible person must apply for registration on behalf of the others. Before applying to register, responsible persons must decide amongst themselves who will submit the application on behalf of all of them. 

Who can apply for voluntary participation?

Under subsection 172(1) of the Greenhouse Gas Pollution Pricing Act, persons responsible for facilities located in a backstop jurisdiction that do not meet the criteria outlined in section 8 of the OBPS Regulations may request that the facility be designated as a covered facility.

The Policy Regarding Voluntary Participation in the Output-Based Pricing System outlines the considerations the Minister will take into account when making such a designation, and has more information on applying for voluntary participation.

Why apply to register?

Under section 171 of the Greenhouse Gas Pollution Pricing Act, a person responsible for a covered facility is obliged to apply for registration of that facility in the OBPS.

Registration is also the first step for persons responsible for covered facilities to obtain exemption from the federal fuel charge for fuel purchased for use at their covered facilities. If an application for registration is successful, Environment and Climate Change Canada will issue a covered facility certificate to the responsible person that submitted an application. This responsible person can then apply to register as an emitter with the Canada Revenue Agency and, once registered as an emitter, obtain an exemption certificate. Fuel delivered to a registered emitter will not be subject to the fuel charge if the registered emitter provides the exemption certificate to its supplier and declares that the fuel will be for use in its covered facility. The fuel charge will generally apply when fuel is diverted for use outside the covered facility.

More information on exemption certificates and how to obtain them.

When to apply to register

Persons responsible for facilities that meet the criteria in section 8 of the OBPS Regulations must apply to register those facilities within 30 days of the facility meeting those criteria.

Persons responsible for a facility who want to opt the facility into the OBPS may apply for designation as a covered facility and registration in the OBPS at any time.

How to apply to register

Persons applying to register must use the Registration and notice of change module in ECCC’s Single Window System. This is an online system that many facilities already use to submit reports required under other federal and provincial legislation. Persons who have already reported facility emissions to the Greenhouse Gas Reporting Program (GHGRP) will already have access.

Access ECCC’s Single Window System.

For more information on submitting an application for registration, see Steps to submitting your OBPS application for registration or notice of change (PDF).

Notifying of changes to registration information

Section 48 of the OBPS Regulations requires the person responsible for the covered facility to notify the Minister, in writing, within 30 days after a change to any of the information submitted in an application to register a facility or an application for designation, including changes in the facility’s perimeter. 

For more information on how to notify the Minister in this case, see Steps to submitting your OBPS application for registration or notice of change (PDF).

Ceasing to be a covered facility

Section 7 of the OBPS Regulations provides that a facility ceases to be a covered facility if the person responsible for the facility makes a request that it cease to be covered because it is expected that the specified industrial activities engaged in at the covered facility will cease for at least 12 consecutive months.

To make such a request, the person responsible for the covered facility must submit a notice of change through the Registration and Notice of Change module in ECCC’s Single Window System. For further information on how to submit a notice of change, see Steps to submitting your OBPS application for registration or notice of change (PDF).

Persons making such a request should familiarize themselves with their obligations under Part 1 of the Greenhouse Gas Pollution Pricing Act if the facility ceases to be a covered facility.

Quantification, Reporting and Verification

General

Section 173 of the Greenhouse Gas Pollution Pricing Act requires that, for each compliance period, a person that is responsible for a covered facility must, in accordance with the Output-Based Pricing System Regulations (OBPS Regulations),

  1. submit to the Minister a report that sets out the information that is specified in the regulations with respect to the greenhouse gas emissions limit that applies to the covered facility and any other information that is specified in the regulations; and
  2. cause the report to be verified by a third party.

Annual Report Content

Each annual report must include the information outlined in sections 11 and 12, and Schedule 2 of the OBPS Regulations.

Quantification

The information to be included in an annual report is set out in the OBPS Regulations. It includes the quantity of GHG emissions and production. For further information on quantification requirements, see Quantification Guidance for the Output-Based Pricing System Regulations (PDF).

Quantification Methods Referred to in the OBPS Regulations

Permits to use Alternative Methods

For the 2020 compliance year and beyond, a person responsible for a covered facility may use a method other than a method or guideline required under sections 17 and 20 of the OBPS Regulations if they have a permit issued in accordance with section 28 of the OBPS Regulations.

The Minister of Environment and Climate Change will determine whether the conditions specified in subsection 28(1) of the OBPS Regulations are met when making a decision about issuing a permit.  

An application for a permit must be submitted to the Minister by a responsible person for a covered facility or their authorized official, in accordance with section 27 of the OBPS Regulations, following the process below.

The permit application must contain all the information referred to in Schedule 4 to the OBPS Regulations and must be accompanied by a certification, dated and signed by the person responsible for the covered facility or their authorized official, stating that the information contained in the application is accurate and complete.

Instructions for submitting an application for a permit to use an alternative method:

  1. Read the instructions within the application form.
  2. Complete all applicable sections of the form. If you have questions, contact us at ec.stfr-obps.ec@canada.ca
  3. Send the form by email or E-post to Environment and Climate Change Canada by March 1 of the year following the compliance year to which the permit would apply.
    1. If sending by email, send to ec.stfr-obps.ec@canada.ca with “Application for a Permit to use Alternative Method” in the subject line.
    2. If you prefer to use E-post, send a request for the link to ec.stfr-obps.ec@canada.ca.

Application for permit (xls; 267 kB)

Verification Reports

An annual report must be accompanied by a verification report. Verification requirements, including use of an accredited verification body and the content of the verification report, are found in sections 49 to 52 and Schedule 5 of the OBPS Regulations.

On May 31, 2020, amendments to the Output-Based Pricing System Regulations came into force that postpone the deadline to submit annual reports and associated verification reports for the 2019 compliance period from June 1, 2020 to October 1, 2020.

The due dates in the following documents do not reflect the recent changes to reporting and compensation deadlines related to the 2019 compliance period.

Further guidance (PDF).

Verifiers should use this guidance document for completing verification reports (docx).

Answers to Frequently Asked Questions about verification (docx).

Annual Report and Verification Report Due Date

Amendments to the Output-Based Pricing System Regulations have been made. They postpone the reporting and compensation deadlines for the compliance period that ended December 31, 2019 by 4 months. Annual reports accompanied by verification reports related to that compliance period must now be submitted on or before October 1, 2020 instead of June 1, 2020. The regular-rate compensation deadline is postponed from December 15, 2020 to April 15, 2021 and the increased-rate compensation deadline from February 15, 2021 to June 15, 2021 for the 2019 compliance period.

How to submit an annual report and verification report

The annual report and verification report must be submitted through the OBPS Reporting module in ECCC’s Single Window System.

To submit an annual report and verification reports, follow these steps:

Step 1: Ensure the information in your registration application is accurate and up to date

Ensure that information in your application to register in the OBPS is up to date by logging into the Registration and Notice of Change module in ECCC’s Single Window System.

It is important the information in your application for registration be up to date and accurate as this information will be used to manage access to, and configure, the OBPS Reporting module in ECCC’s Single Window System, through which the annual report must be submitted. The Authorized Official named in the registration application will be expected to sign the annual report. They will also be responsible for opening and maintaining an account in ECCC’s Credit and Tracking System (CATS) through which surplus credits owed to the responsible person will be issued, compensation will be remitted and tracked, and credits will be transferred and managed.

See Steps to submitting your OBPS application to register and notice of change (PDF) for information on how to view your registration application and submit a notice of change should you need to update the information in your registration application. 

Step 2: Complete and submit your annual report and verification report

Log in to ECCC’s Single Window System

Click on ECCC and Partners Greenhouse Gas Reporting and ECCC Output-Based Pricing System (OBPS).  

If you do not see this link, you do not have access. Refer to the instructional videos to learn how to gain access.

A welcome screen will give you the option to continue to GHG Reporting or to OBPS Registration and notice of change or to OBPS Reporting.

Click on OBPS Reporting.

On the OBPS Reporting Dashboard screen, search for the facility for which you want to create a report for by filtering on Responsible Person name and Compliance Year.

Select the + action in the dashboard for the correct facility.

Follow the instructions in the blue and grey information boxes throughout the system to complete all sections. 

OBPS Annual Reports and GHG Reporting Program (GHGRP)

Please note facility operators are also required to submit a separate annual report to the federal GHGRP if they meet the reporting criteria under that program. To understand how the information reported in the OBPS Annual Report is applicable to GHGRP reporting, you may download a copy of the OBPS to GHGRP printout from the OBPS reporting dashboard. For further information on reporting to the GHGRP, please visit the website Reporting greenhouse gas emissions.

Persons responsible for reporting to both the OBPS and the GHGRP should review the reporting requirements of the OBPS in the OBPS Regulations and under the GHGRP prior to starting the reporting process to ensure they are aware of all requirements and provide the appropriate data for each program.

Compensation, Credits and CATS

Compensation Obligation

Under the Output-Based Pricing System (OBPS), persons responsible for covered facilities are required to provide compensation for greenhouse gas (GHG) emissions that exceed the facility’s annual emissions limit. The methods for providing compensation are one of the following or a combination of both:

  1. making an excess emissions charge payment electronically to the Receiver General for Canada, and
  2. remitting compliance units, namely surplus credits, offset credits, or recognized units.

Making an Excess Emissions Charge Payment

Further information on making excess emissions charge payments will be provided in the fall 2020.

Remitting Surplus Credits

As per section 175 of the Greenhouse Gas Pollution Pricing Act, the Minister of Environment and Climate Change will issue surplus credits to persons responsible for covered facilities whose emissions are lower than the applicable emissions limit.  Surplus credits may be banked, traded or used for compliance.

The deadline for submitting annual and verification reports for the Output-Based Pricing System compliance period that ended December 31, 2019 has been delayed from June 1, 2020 to October 1, 2020. With this delay in the reporting deadline, it is expected surplus credit issuance will occur in early 2021 in time to allow trading before the regular rate compensation deadline of April 15, 2021. Credits will be issued through the Credit and Tracking System (CATS) into facility accounts. CATS is expected to be open for registration in January 2021. CATS will support the issuance, banking, trading and remittance of surplus credits as well as the management of compensation obligations. More information on CATS will be provided in the fall of 2020.

Remitting Offset Credits

Federal offset credits can be remitted as compensation for emissions that exceed a facility’s emissions limit. Further information on the Federal GHG Offset System is available on the Federal Greenhouse Gas Offset System page.

Remitting Recognized Units

A unit or credit will be recognized as a compliance unit if it is issued under a GHG offset program and protocol that meets the eligibility criteria set out in the Output-Based Pricing System Regulations. The Department will publish the list of eligible offset programs and protocols on its website in the coming months.

CATS

ECCC’s Credit and Tracking System (CATS) is expected to be open for registration in January 2021. CATS will support the issuance, banking, trading and remittance of surplus credits as well as the management of compensation obligations. More information on CATS will be provided in the fall of 2020.

Saskatchewan and Alberta

Saskatchewan

On October 23, 2018, the federal government recognized that Saskatchewan was on track to only partially meet the federal benchmark stringency requirements. The federal carbon pollution pricing system was implemented, in part, in Saskatchewan under the Greenhouse Gas Pollution Pricing Act with the following features:

  • the federal OBPS applies to electricity generation and natural gas transmission lines, as of January 1, 2019
  • the fuel charge as set out under Part 1 of the Greenhouse Gas Pollution Pricing Act started applying on April 1, 2019

Alberta

In June 2019, the Government of Canada announced that the fuel charge would apply in Alberta, effective January 1, 2020, as a result of the province's repeal of its carbon levy. On December 6, 2019, the Government of Canada announced that Alberta's Technology Innovation and Emissions Reduction (TIER) regulations - which were announced on October 29, 2019 and came into force on January 1, 2020 - met the federal government's stringency requirements for the emission sources they cover. Accordingly, the federal fuel charge applies in Alberta, but not the federal output-based pricing system.

Information for Saskatchewan Regulated Emitters and Persons Responsible for facilities subject to Alberta’s TIER

If you are a regulated emitter under Saskatchewan’s Management and Reduction of Greenhouse Gases (Standards and Compliance) Regulations or the owner or operator of a facility subject to Alberta's Technology Innovation and Emissions Reduction (TIER) regulations, you can apply to Environment and Climate Change Canada and the Canada Revenue Agency in order to register as an emitter. Doing so will allow you to use an exemption certificate which you can provide to your fuel supplier(s). This will allow deliveries of fuel to be made by a registered distributor to your facility without the application of the federal fuel charge at the time of delivery if the fuel is for use at your facility, subject to certain conditions. 

If you are not already registered as an emitter with the CRA and you want to register as an emitter, follow these steps:

Emitters registered under Saskatchewan’s Management and Reduction of Greenhouse Gases (Standards and Compliance) Regulations

  1. Register your facility or facilities (as per s.5 or s.6 of The Management and Reduction of Greenhouse Gases (Standards and Compliance) Regulations) with the Saskatchewan Ministry of Environment.  
  2. After you have received written confirmation of registration from the province, send a copy of your confirmation of registration via email to ec.stfr-obps.ec@canada.ca with the subject line: “Saskatchewan OBPS — Confirmation Request” or, if an aggregate facility, “Saskatchewan OBPS — Aggregate Facility Confirmation Request”; for a statement under the Fuel Charge Regulations.
  3. The federal Minister of Environment and Climate Change will confirm that your facility (or all facilities in your aggregate facility) meet the relevant conditions of the Fuel Charge Regulations and issue you a statement containing a statement number for each of your facilities.
  4. Using the statement number(s), apply to the CRA for registration as an emitter. The registration form and the related schedule are available by clicking on the link. If you are responsible for a non-aggregated facility, ensure the statement number for the facility is included in your application.
  5. Once registered as an emitter by the CRA, download and complete an exemption certificate to present to your fuel supplier(s).

Emitters registered under Alberta’s TIER regulations

  1. Become a regulated facility under TIER.
  2. After receiving confirmation of regulation from Alberta Environment and Parks, send a request to Environment and Climate Change Canada via email to ec.stfr-obps.ec@canada.ca with “Alberta – Request confirmation” in the subject line; for a statement under the Fuel Charge Regulations. Include in your request the following information:
    • The name of the facility(ies) subject to TIER.
    • Whether you are the owner or operator of the facility.
  3. The federal Minister of Environment and Climate Change will confirm that your facility(ies) meet the relevant conditions of the Fuel Charge Regulations and issue you a statement affirming this, assigning a statement number to each of your facilities.
  4. Apply to the CRA for registration as an emitter. The registration form and the related schedule are available by clicking on the link. If you are responsible for a non-aggregated facility, ensure the statement number for the facility is included in your application.
  5. Once registered as an emitter by the CRA, download and complete an exemption certificate to present to your fuel supplier(s).

You are encouraged to familiarize yourself with the rules and obligations under Part 1 of the Greenhouse Gas Pollution Pricing Act and its regulations that pertain to you. Information regarding registration with the CRA and specific rules and obligations under Part 1 of the Act (Federal fuel charge) can be found under FCN5 Emitters Under the Greenhouse Gas Pollution Pricing Act.

Notification Requirements

If a statement has been issued to you by the Minister of Environment and Climate Change, you are required under ss. 25(3) and (4) of the Fuel Charge Regulations to notify the Minister of Environment and Climate Change, in writing, without delay:

  • when you cease to be a person responsible for the facility,
  • if there is a change in respect of the facility that could materially affect either the boundary of any site of the facility or a new determination as to whether the facility is covered under the provincial OBPS.

Notification may be given by sending relevant information including the Statement Number and date of issuance of the Statement to ec.stfr-obps.ec@canada.ca.

For further information, please contact the OBPS Operations Office.

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