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.
Legislation and Regulations
The Output-Based Pricing System Regulations, established under Part 2 of the Greenhouse Gas Pollution Pricing Act, were published on June 28, 2019. 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 final publication of the regulations.
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.
The fuel charge component of the federal carbon pollution pricing system is administered by the Canada Revenue Agency.
- Pricing pollution: how will it work (October 2018)
- Fall 2018 update: estimated impacts of pollution pricing (October 2018)
- Update on the output-based pricing system (July 2018)
- Carbon pricing: compliance options under the federal output-based pricing system (May 2018)
- Regulatory framework for the output-based pricing system (January 2018)
- Technical paper on the federal carbon pricing backstop (May 2017)
- Estimated impacts of the Federal Carbon Pollution Pricing System (April 2018)
- Greenhouse Gas Emissions Information Production Order (October 2018)
- Order Amending the Greenhouse Gas Emissions Information Production Order (December 2018)
- Notice Establishing Criteria Respecting Facilities and Persons and Publishing Measures (October 2018)
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 section 172(1) of the Greenhouse Gas Pollution Pricing Act, persons responsible for facilities 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 be take into account when making such a designation.
See Policy Regarding Voluntary Participation in the Output-Based Pricing System for 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.
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 other facilities who want to opt 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.
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, 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
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 regulations,
- 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
- 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 Output-Based Pricing System Regulations (OBPS Regulations).
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
- Greenhouse Gas Reporting Program (PDF), Canada’s Greenhouse Gas Quantification Requirements, published in 2017
- Directive 017
- Directive 017: Measurement Requirements for Oil and Gas Operations, published by the Alberta Energy Regulator on December 13, 2018
- Directive PNG017
- Directive PNG017: Measurement Requirements for Oil and Gas Operations, published by the Government of Saskatchewan on August 1, 2017
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 12 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 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:
- Read the instructions within the application form.
- Complete all applicable sections of the form. If you have questions, contact us at email@example.com
- 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.
Application for permit (xls; 267 kB)
Annual reports 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.
Verifiers should use this template for completing verification reports (docx).
Annual Report and Verification Report Due Date
Section 13 of the OBPS Regulations states annual reports accompanied by verification reports are due June 1st of the year following the compliance period for which the report is prepared.
The Minister of Environment and Climate Change posted a notice on April 8, 2020, pursuant to section 194 of the Greenhouse Gas Pollution Pricing Act, signaling his intent to recommend, for approval by the Governor in Council, amendments to the Output-Based Pricing System Regulations. The amending regulations would postpone this deadline the first compliance year by four months and require that the annual report related to the 2019 compliance period be submitted on or before October 1, 2020. The regular-rate compensation deadline would also be postponed from December 15, 2020 to April 15, 2021 and the increased-rate compensation deadline from February 15, 2021 to June 15, 2021.
While these changes defer the reporting and compensation obligations for the first OBPS compliance period, they do not remove those obligations.
Please visit this notice of intent to amend the Output-Based Pricing System Regulations to view the notice.
How to submit an annual report and verification report
Annual reports and verification reports 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 annual reports 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 Output Based Pricing System 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
Under the Output Based Pricing System, persons responsible for covered facilities are required to compensate 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:
- making an excess emissions charge payment electronically to the Receiver General for Canada, and
- remitting compliance units, namely surplus credits, offset credits, or recognized units.
Making an Excess Emissions Charge Payment
Further information on making an excess emissions charge payment will be provided in the coming weeks.
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. Further information on how to remit surplus credits using the Credit and Tracking System (CATS) being developed will be available in spring 2020.
Remitting Offset Credits
A federal GHG offset system to encourage cost-effective domestic GHG emission reductions and removals from activities that are not covered by carbon pollution pricing is under development. The department published a design options paper in June 2019: Carbon pollution pricing: options for a Federal Greenhouse Gas Offset System and will be seeking input on additional elements of the system, including priority protocol types, in late spring 2020.
Regulations to establish the federal offset system are currently under development and will build on the recommendations in the Pan-Canadian Greenhouse Gas Offsets Framework (PDF) for the design for offset systems, published by the Canadian Council of Ministers of the Environment (CCME) in October 2019. Publication of draft regulations is targeted for fall 2020.
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.
ECCC’s Credit and Tracking System (CATS) will be open for use in spring 2020. All persons responsible for covered facilities are required to open an account in CATS. Information on the process for opening an account will be released in spring 2020. Accounts will be used to track compensation obligations related to all covered facilities. Surplus credits owed to persons responsible for covered facilities will be issued to accounts in CATS. Persons responsible for covered facilities must use CATS to complete trading and remission of surplus credits. Webinars will be offered periodically on how to use CATS.
Saskatchewan and Alberta
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
- a charge as set out under Part 1 of the Greenhouse Gas Pollution Pricing Act started applying in April 2019
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
- 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.
- After you have received written confirmation of registration from the province, send a copy of your confirmation of registration via email to firstname.lastname@example.org with the subject line: “Saskatchewan OBPS — Confirmation Request” or, if an aggregate facility, “Saskatchewan OBPS — Aggregate Facility Confirmation Request”.
- The federal Minister of Environment 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.
- Using the statement number(s), apply to the CRA for registration as an emitter. The registration form and the related schedule can be found here.
- 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
- Become a regulated facility under TIER.
- After receiving confirmation of regulation from Alberta Environment and Parks, send a request to Environment and Climate Change Canada via email to email@example.com 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.
- 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.
- Apply to the CRA for registration as an emitter. The registration form and the related schedule can be found here. If you are responsible for a non-aggregated facility, ensure the statement number for the facility is included in your application.
- 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
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 ceases 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 firstname.lastname@example.org.
For further information, please contact the OBPS Operations Office.
- By email: email@example.com
- By phone: 1-833-849-9160
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