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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” (i.e. the risk of industrial facilities moving from one region to another to avoid paying a price on carbon pollution).

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

Important notice 

The OBPS Reporting module in ECCC’s Single Window System is open for submission of annual reports and verification reports for the 2022 compliance period. The deadline for submitting an annual report and verification report under the OBPS for the 2022 compliance period is June 1, 2023. Visit the Quantification, Reporting and Verification tab for more information.

Overview

Legislation and Regulations

The Output-Based Pricing System Regulations (OBPS Regulations), established under Part 2 of the Greenhouse Gas Pollution Pricing Act (GGPPA), were published in the Canada Gazette, Part II, on July 10, 2019, following the publication of a Notice of Intent in December, 12, 2018. The OBPS Regulations apply in jurisdictions listed on Part 2 of Schedule 1 to the GGPPA (backstop jurisdictions), as shown on the Carbon pollution pricing systems across Canada web page.

Recent amendments

A Notice of Intent was published on December 23, 2022, indicating the Government of Canada’s intent to remove Saskatchewan from Part 2 of Schedule 1 to the Greenhouse Gas Pollution Pricing Act.

On October 26, 2022, the Order Amending Schedule 3 to the Greenhouse Gas Pollution Pricing Act (Order Amending Schedule 3) and the Order Amending Schedule 4 to the Greenhouse Gas Pollution Pricing Act (Order Amending Schedule 4) were published in the Canada Gazette, Part II. The Order Amending Schedule 3 updates the global warming potential values for greenhouse gases listed on Schedule 3 to the Act as of January 1, 2023, in accordance with the Intergovernmental Panel on Climate Change’s Fifth Assessment Report. The Order Amending Schedule 4 updates the excess emissions charge for calendar years 2023 to 2030. The excess emissions charge increases to $65 per tonne of CO2e in 2023 and will increase by $15 per calendar year until 2030, resulting in an excess emissions charge of $170 per tonne of CO2e in 2030.

A Notice of Intent was published on October 28, 2022, indicating the Minister of Environment and Climate Change’s intent to amend the Output-Based Pricing System Regulations. More information about the proposed Regulations Amending the Output-Based Pricing System Regulations and the Environmental Violations Administrative Monetary Penalties Regulations can be found under the For Comments tab.

On September 1, 2021, the Order Amending Part 2 of Schedule 1 to the Greenhouse Gas Pollution Pricing Act (the Order) was published in the Canada Gazette, Part II. This Order removes the name of New Brunswick from Part 2 of Schedule 1 to the GGPPA retroactively to January 1, 2021, and of Ontario as of January 1, 2022.

On the same day, the Regulations Amending the Output-Based Pricing System Regulations were also published in the Canada Gazette, Part II. These amendments improve clarity and implementation of the OBPS Regulations and prepare the federal OBPS for transitions to provincial carbon pollution pricing systems. Certain amendments are effective retroactively to January 1, 2021, as enabled by section 194 of the GGPPA and the Notice of Intent published on December 23, 2020, while others came into force on January 1, 2022.

Guidance material

The Overview of OBPS Regulations outlines the main regulatory requirements under the OBPS Regulations.  

The Quick Reference: Output-Based Pricing System Regulations (PDF) can be used as a reference guide to determine which requirements apply to a facility.

These documents only provide an overview of OBPS requirements. It is advised to become familiar with the GGPPA and the OBPS Regulations in their entirety to ensure a full understanding of legal obligations.  

Transition in New Brunswick

Covered Facility Certificates issued under the federal OBPS for facilities located in New Brunswick will be cancelled effective January 1, 2021.

As per section 10.1 of the amended OBPS Regulations, persons responsible for facilities in New Brunswick that were subject to the federal OBPS in 2019 and/or 2020 continue to have obligations, including to submit annual and verification reports and provide compensation, if applicable, for those compliance periods, and must notify of errors or omissions in annual and verification reports if they become aware of either within five years after submission. They must maintain and update their accounts in the Credit and Tracking System (CATS) during the period necessary under the GGPPA to deal with corrected reports and revised compensation, as applicable. They will also need to maintain their accounts in the OBPS Notice of Change and Registration and OBPS Reporting modules in ECCC’s Single Window System.

Surplus credits issued to a facility in New Brunswick will not be eligible for remittance as compensation for the 2021 or subsequent compliance periods. Visit the Compensation, Credits and Credit and Tracking System tab for more information.

Questions regarding the New Brunswick pricing system for industry can be addressed to NBOBPS-STFRNB@gnb.ca.

Transition in Ontario

Covered Facility Certificates issued under the federal OBPS for facilities located in Ontario will be cancelled effective January 1, 2022.

As per section 10.1 of the amended OBPS Regulations, persons responsible for facilities in Ontario that were subject to the federal OBPS in 2019, 2020 and/or 2021 continue to have obligations, including to submit annual and verification reports and provide compensation, if applicable, for those compliance periods, and must notify of errors or omissions in annual and verification reports if they become aware of either within five years after submission. They must maintain and update their accounts in the Credit and Tracking System (CATS) during the period necessary under the GGPPA to deal with corrected reports and revised compensation, as applicable. They will also need to maintain their accounts in the OBPS Notice of Change and Registration and OBPS Reporting modules in ECCC’s Single Window System.

Surplus credits issued to a facility in Ontario will not be eligible for remittance as compensation for the 2022 or subsequent compliance periods. Visit the Compensation, Credits and Credit and Tracking System tab for more information.

Further details related to the process for integrating facilities subject to the Ontario Emission Performance Standard program with the federal fuel charge will be provided shortly.

Questions regarding the Ontario Emission Performance Standard program can be addressed to epsapplications@ontario.ca.

Return of OBPS Proceeds

Proceeds from the OBPS in backstop jurisdictions will be returned to the jurisdiction of origin to support industrial projects to cut emissions and use new cleaner technologies and processes.

Output-Based Pricing System Proceeds Fund

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 (updated as of Jan. 1, 2023) 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 (ECCC) 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 of Environment and Climate Change 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.

Reporting Deadline

The deadline for submitting an annual report and a verification report under the OBPS Regulations is June 1 of the calendar year following the compliance period.

Content

Each annual report and corrected report must include the information outlined in sections 11 and 12, and Schedule 2 of the OBPS Regulations. Associated verification reports must contain the information outlined in Schedule 5 of the OBPS Regulations.

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 is 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 is expected to sign the annual report.

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 Period.

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.

Notification of Errors or Omissions

Sections 176 and 177 of the Greenhouse Gas Pollution Pricing Act require that the person responsible for a covered facility notify, as soon as possible, the Minister in writing if within 5 years of submitting an annual report they become aware of an error or omission in the report.  Submitting a Notice of Error is done through the OBPS Reporting module in ECCC's Single Window System.

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.

Guidance material on the quantification requirements for the:

Quantification Methods Referred to in the OBPS Regulations

Verification Reports

Third-party verification increases the credibility and integrity of the overall carbon pollution pricing system and informs, in the context of the OBPS Regulations, the Minister of Environment and Climate Change's review of the reported information.

In accordance with the OBPS Regulations, a verification report, must be submitted with an annual report and with a corrected report (if required).

Consult the Verification Guidance for the OBPSR for more information regarding verification requirements

Verifiers should consult the Verification Report Template (.docx) for specific information about format and content of verification reports.

Permits to use Alternative Methods

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, by March 1 of the year following the compliance period to which the permit would apply, following the process outlined in the application for permit below.

The application for an alternative methods permit can be found here: Application for permit (xls; 267 kB).

Request for Confidentiality

As per section 254 of the Greenhouse Gas Pollution Pricing Act (GGPPA), a person that provides information to the Minister of Environment and Climate Change under Part 2 of the GGPPA may submit with the information a written request, with supporting justifications, that the information be treated as confidential.

Please note, as a matter of practice, ECCC will not proactively disclose facility level annual production and emissions intensity values collected under the GGPPA, that are not already available to the public, subject to provisions of the Access to Information Act (ATIA). Prior to any disclosure under the ATIA, ECCC would consider all relevant exemptions in the ATIA, including subsection 20(1), which aims to protect third party information. If ECCC proposes to disclose information under the ATIA that contains or might contain information described in subsection 20(1) of ATIA, ECCC will give the third party written notice and an opportunity to provide written representations to ECCC in accordance with section 27 and 28 of the ATIA. If ECCC intends to claim an exemption for third party information pursuant to subsection 20(1) of ATIA, the requirement for third party notification under sections 27 and 28 will not apply.

Fill out this form if you wish to submit a request for confidentiality (PDF).

Compensation, Credits and Credit and Tracking System

Compensation Obligation

Under the Output-Based Pricing System (OBPS), persons responsible for covered facilities are required to provide compensation at the prescribed rate for greenhouse gas (GHG) emissions that exceed the facility's annual emissions limit, the excess emissions. 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, federal offset credits, or recognized units.
For compensation provided on or before the regular-rate compensation deadline, the compensation required per CO2e tonne of excess emissions is one compliance unit or the excess emissions charge rate applicable to the compliance period. For compensation provided after the regular-rate compensation deadline, the compensation required for each CO2e tonne of excess emissions is four compliance units or four times the excess emissions charge rate applicable to the compliance period.

Compensation Deadlines

The regular-rate compensation deadline is December 15 of the calendar year in which the related annual report must be submitted and the increased-rate compensation deadline is February 15 of the year following the regular-rate compensation deadline.

Credit and Tracking System (CATS)

The Credit and Tracking System (CATS) is now open. CATS tracks compliance obligations, credit issuance and transfers, and remittance of compliance units and excess emissions charge payments under the Output-Based Pricing System (OBPS).

Persons responsible for covered facilities under the OBPS are required to open an OBPS account in CATS. Only the authorized official named in the application to register the facility in the OBPS may open the account. The OBPS Operations Office sends information about how to apply to open OBPS accounts in CATS by email to the authorized official, and carbon copies the contact person named in the application to register the facility in the OBPS. If you are an authorized official under the OBPS and did not receive an email with this information, please contact the OBPS Operation Office.

If you need to change the authorized official named in the OBPS Registration application you must submit a Notice of Change in the Registration and notice of change module in ECCC's Single Window System (SWIM) prior to submitting the application to open an OBPS account in CATS. For more information, see Steps to submitting your OBPS application for registration or notice of change (PDF).

Once an authorized official has opened an OBPS account in CATS for a covered facility, they may add additional users.

Making an Excess Emissions Charge Payment

Excess emissions charge payments must be initiated in CATS and made via wire transfer or direct deposit. It is essential payees first access CATS before making a wire transfer or direct deposit. The User Guide in CATS provides specific instructions on initiating a payment, on making a wire transfer or direct deposit through your financial institution, and the follow-up steps required in CATS.

Issuing Surplus Credits

As per section 175 of the Greenhouse Gas Pollution Pricing Act and in accordance with the OBPS Regulations, the Minister of Environment and Climate Change issues surplus credits to persons responsible for covered facilities whose emissions are lower than the applicable emissions limit, provided that no material discrepancy exists with respect to the quantity of GHGs and production.

Surplus credits will be issued to the applicable OBPS account in CATS after the submission of the related annual report. ECCC will review annual reports and may require corrections that result in previously issued surplus credits being revoked or assignment of compensation obligations.

Transferring Surplus Credits

CATS features a Message Board that allows users associated with an OBPS account to post a message indicating an interest in buying or selling eligible credits, and other users associated with an OBPS account to respond to posted messages. Only persons associated with a covered facility under the OBPS can use CATS and buy or sell surplus credits at this time. The User Guide in CATS provides specific instructions on transferring surplus credits.

Remitting Surplus Credits

Use CATS to remit surplus credits against a compensation obligation. The User Guide in CATS provides specific instructions on remitting surplus credits.

Limitations on surplus credits eligible for remittance

New Brunswick has been removed from Part 2 of Schedule 1 to the GGPPA retroactively to January 1, 2021. Ontario will be removed as of January 1, 2022.

As a result, surplus credits issued to a facility in New Brunswick will not be eligible for remittance as compensation for the 2021 or subsequent compliance periods. They will continue to be eligible for remittance as compensation for the 2019 and 2020 compliance periods only.

Surplus credits issued to a facility in Ontario will not be eligible for remittance as compensation for the 2022 or subsequent compliance periods. They will continue to be eligible for remittance as compensation for the 2019, 2020 and 2021 compliance periods only.

Note that the serial number of a surplus credit identifies the province in which the facility to which the surplus credit was issued is located. Section 6.1 "Viewing Surplus Credits" of the CATS User Guide, accessible from the left hand pane on the "Home" tab of CATS, outlines how to read and understand the serial number.

Suspension of certain surplus credits

If surplus credits issued to a facility in New Brunswick or Ontario have not been remitted or transferred by the following dates, those credits may be subject to suspension, making them ineligible for remittance or transfer.

  • February 15, 2022, when issued to facilities located in New Brunswick and held in the accounts of facilities located in that province;
  • February 15, 2023, when issued to facilities located in Ontario and held in the accounts of facilities located in that province.

Please note that, as stated in the previous section, whether or not credits are suspended, surplus credits issued to a facility in New Brunswick will not be eligible for remittance as compensation for the 2021 or subsequent compliance periods, and surplus credits issued to a facility in Ontario will not be eligible for remittance as compensation for the 2022 or subsequent compliance periods.

Remitting Federal Offset Credits

Federal offset credits can be remitted as compensation for emissions that exceed a facility's emissions limit. Further information on the proposed Canada's Greenhouse Gas (GHG) Offset Credit System and the development of federal offset protocols is available on the Canada's GHG Offset Credit System web page.

Remitting Recognized Units

A unit or credit will be recognized as a compliance unit if it meets the eligibility requirements in section 78 of the federal Output-Based Pricing System Regulations (OBPS Regulations). As outlined in paragraph 78(1)(b) of the OBPS Regulations, the unit or credit must be issued under a GHG offset program and protocol that appear on the List of Recognized Offset Programs and Protocols for the Federal OBPS. Environment and Climate Change Canada maintains the List of Recognized Offset Programs and Protocols for the Federal OBPS.

For further information on requirements for use of recognized units for compensation under the federal OBPS, see:

For comments

Share your thoughts

Seeking feedback from stakeholders is a key activity of Environment and Climate Change Canada (ECCC), as it supports open and transparent government. It allows for discussion among stakeholders and the Government of Canada, about designing, implementing and evaluating the federal Output-Based Pricing System (OBPS).

Current comment period

There is currently no open comment period.

Closed comment period

For further information, please contact the OBPS Operations Office.

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