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Output-Based Pricing System

Important notice 

Effective April 1, 2025, the fuel charge under Canada’s carbon pricing system is $0. The federal Output-Based Pricing System (OBPS) remains in effect. On this site, you will find information about the OBPS.

Monday December 15, 2025, is the regular-rate compensation deadline for the 2024 compliance period.

Compensation provided after this date will be subject to the increased (4:1) compensation rate. Visit the Compensation, Credits and Credit and Tracking System tab for more information.

Overview

The federal Output-Based Pricing System (OBPS) is a regulatory system for large industry. It creates a financial incentive for industrial facilities to reduce their greenhouse gas (GHG) emissions and drive innovation, while protecting against the risks of “carbon leakage” (industries moving to other regions to avoid a price on carbon pollution).

Participants of the OBPS are required to compensate for GHG emissions that exceed an annual facility emissions limit. If a facility’s emissions are below its annual limit, it will earn surplus credits. These surplus credits can be sold to facilities that need credits for compliance or banked for future use. This creates an ongoing financial incentive for facilities to reduce their emission intensity in order to reduce the amount owed for compensation or to emit below their limit and earn surplus credits.

The OBPS applies in jurisdictions listed on Part 2 of Schedule 1 to the Greenhouse Gas Pollution Pricing Act (GGPPA) (backstop jurisdictions). For a full list, visit the Carbon pricing systems across Canada web page.

Legislation and regulations

The OBPS is established under Part 2 of GGPPA and the Output-Based Pricing System Regulations (OBPS Regulations). The OBPS Regulations and its companion Regulatory Impact Analysis Statement were published in the Canada Gazette, Part II, on July 10, 2019.

Amendments to the Output-Based Pricing System Regulations

March 15, 2025

Regulations Amending the Output-Based Pricing System Regulations were published in the Canada Gazette, Part II. These amendments aim to:

  • ensure continued effective functioning of the OBPS given the changes to the federal fuel charge,
  • shorten the compliance period for voluntary facilities where designation as a covered facility is cancelled by the Minister in 2025, and
  • change the definition of “on-site transportation emissions” to ensure those emissions remain covered by industrial carbon pricing.

Certain amendments came into force on the day on which they were registered, and others on April 1, 2025.

November 22, 2023

Regulations Amending the Output-Based Pricing System Regulations and the Environmental Violations Administrative Monetary Penalties Regulations were published in the Canada Gazette, Part II. These amendments aim to:

  • ensure continued GHG emissions reductions,
  • reduce the administrative burden, and
  • improve the implementation of the OBPS Regulations.

Certain amendments were effective retroactively to January 1, 2023, as enabled by section 194 of GGPPA and the Notice of Intent published on October 28, 2022, while others came into force on the day on which they were registered or on January 1, 2024.

A new technical document, Quantification Methods for the Output-Based Pricing System Regulations, and was published on December 12, 2023. It replaces Schedule 3 to the OBPS Regulations and outlines detailed GHG emissions quantification methods.

September 1, 2021

Regulations Amending the Output-Based Pricing System Regulations were published in the Canada Gazette, Part II. These amendments aim to:

  • improve clarity and implementation of the OBPS Regulations, and
  • prepare the federal OBPS for transitions to provincial industrial carbon pricing systems.

Certain amendments were effective retroactively to January 1, 2021, as enabled by section 194 of GGPPA and the Notice of Intent published on December 23, 2020, while others came into force on January 1, 2022.

June 10, 2020

Regulations Amending the Output-Based Pricing System Regulations were published in the Canada Gazette, Part II. These amendments aim to:

  • postpone the deadline to submit annual reports and associated verification reports for the 2019 compliance period from June 1, 2020, to October 1, 2020, and
  • postpone the regular-rate and increased rate compensation deadlines for the 2019 compliance period from December 15, 2020, and February 15, 2021, to April 15, 2021, and June 15, 2021, respectively.

The amendments were effective May 31, 2020 and the Notice of Intent was published on April 8, 2020.

Amendments to Schedules to the Greenhouse Gas Pollution Pricing Act

July 5, 2023

Order Amending Part 2 of Schedule 1 to the Greenhouse Gas Pollution Pricing Act was published in the Canada Gazette, Part II.

This Order removes the province of Saskatchewan from Part 2 of Schedule 1 to GGPPA retroactively to January 2023, as enabled by section 194 of GGPPA and the Notice of Intent that was published on December 23, 2022.

October 26, 2022

Order Amending Schedule 3 to the Greenhouse Gas Pollution Pricing Act (Order Amending Schedule 3) was published in the Canada Gazette, Part II.

The Order Amending Schedule 3 updates the global warming potential values for GHG listed on Schedule 3 to GGPPA as of January 1, 2023, in accordance with the Intergovernmental Panel on Climate Change’s Fifth Assessment Report.

Order Amending Schedule 4 to the Greenhouse Gas Pollution Pricing Act (Order Amending Schedule 4) was published in the Canada Gazette, Part II.

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.

September 1, 2021

Order Amending Part 2 of Schedule 1 to the Greenhouse Gas Pollution Pricing Act was published in the Canada Gazette, Part II.

This Order removes New Brunswick from Part 2 of Schedule 1 to GGPPA retroactively to January 1, 2021, as enabled by section 194 of GGPPA and the Notice of Intent published on December 23, 2020, and of Ontario as of January 1, 2022.

Return of OBPS Proceeds

Proceeds from the OBPS in backstop jurisdictions are returned to the jurisdiction of origin to support:

  • industrial projects to cut emissions, and
  • new cleaner technologies and processes.

For more information visit Output-Based Pricing System Proceeds Fund, and Carbon Pollution Pricing Proceeds Programming.

Registration

Mandatory participation

Under subsection 171(1) of the Greenhouse Gas Pollution Pricing Act (GGPPA), a person responsible for a covered facility must register the facility in the Output-Based Pricing System (OBPS) if:

Persons responsible must apply to register those facilities within 30 days of the facility meeting the criteria. If there is more than one person responsible for a covered facility, the requirements of GGPPA and the OBPS Regulations apply to each person responsible. However, compliance by one person responsible will satisfy the obligations. Persons responsible must agree who will comply on behalf of all of them, and one person responsible must apply for registration on behalf of the others.

Voluntary participation

Under subsection 172(1) of GGPPA, a person responsible for a facility located in a backstop jurisdiction that does not meet the conditions above may request the Minister designate the facility as a covered facility. The Minister will take into account the criteria outlined in the Policy Regarding Voluntary Participation in the Output-Based Pricing System (effective January 1, 2024) when determining whether to designate a facility.  This policy is currently under review and subject to change.

Requests for voluntary participation in the OBPS are due each year by July 15 for participation starting January 1 of the following calendar year.

Notifying of changes to registration information

Under section 48 of the OBPS Regulations, a person responsible for a covered facility must notify the Minister in writing, of any change to registration information, including to the facility’s boundaries or industrial activities. Notice is required within 30 days of the change.

How to apply to register or notify of changes to registration information

Use the Registration and notice of change module in ECCC’s Single Window System (SWIM) to apply to register or update existing registration information.

Persons who have already reported facility emissions to the Greenhouse Gas Reporting Program (GHGRP) will already have access.

Ceasing to be a covered facility

Section 7 of the OBPS Regulations provides that a facility ceases to be a covered facility when:

  • it has ceased production for all specified industrial activities for five consecutive compliance periods, or
  • a request is made because it is expected that the specified industrial activities engaged in at the covered facility will cease for at least 12 consecutive months.

Cancellation of designation

A person responsible for a voluntary facility may apply to have the designation of the facility cancelled. If the Minister approves the request, cancellation is effective as of December 31 of the calendar year in which the decision is made. If the Minister cancels the designation in 2025, the final compliance period for the facility is January 1, 2025, to March 31, 2025.

The Minister may also cancel the designation and registration of a covered facility if

  • it was designated on the expectation it would emit at least 10 kt of carbon dioxide equivalent (CO2e) in any of the three calendar years following its date of first production, and
  • it fails to do so by December 31 of the third year.
Quantification, Reporting and Verification

General

Section 173 of the Greenhouse Gas Pollution Pricing Act (GGPPA) requires that, for each compliance period, a person 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 (GHG) emissions limit that applies to the covered facility and any other information that is specified in the regulations; and
  2. have the report verified by a third party.

Reporting deadline

The deadline for submitting an annual report and a verification report 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

Use the OBPS Reporting module in ECCC’s Single Window System (SWIM) to submit the annual report and verification report.

Notification of errors or omissions

Under sections 176 and 177 of GGPPA, the person responsible must notify the Minister in writing as soon as they become aware of an error or omission within 5 years of submitting an annual report. You can submit a Notice of Error through the OBPS Reporting module in SWIM.

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.

Quantification methods

The Quantification Methods for the Output-Based Pricing System Regulations (Quantification Methods) are incorporated by reference into the OBPS Regulations, and specify the methods to quantify GHGs, the ratio of heat and the quantity of electricity generated.

Version 2.0 of the Quantification Methods, published in December 2025, replaces the Quantification Methods published in December 2023 and applies to the 2026 and future compliance periods. 

Version 1.0 of the Quantification Methods, published in December 2023, applies to the 2024 and 2025 compliance periods.

Guidance on quantification requirements

Guidance on the quantification requirements of GHGs and production, including emissions limits and calculated output-based standards (OBS) is available for the:

Links to quantification methods referred to in the OBPS Regulations

Additional Industrial Activities

The List of Recognized Additional Industrial Activities under the OBPS was published in 2024 and is updated annually. Starting with the 2024 compliance period, all covered facilities engaged in additional industrial activities must include these activities in their emissions limit calculations starting with the compliance period that follows the calendar year in which the additional industrial activity is recognized. Persons responsible for covered facilities engaged in newly recognized additional industrial activities must submit a notice of change to update the registration information for the facility.

Verification reports

Third-party verification strengthens the credibility and integrity of the overall industrial carbon pricing system. A verification report must be submitted with an annual report and with a corrected report (if required). It informs the Minister’s review of the reported information.

For information on verification requirements, review the Verification Guidance for the OBPSR.

For specific information about the format and content of verification reports verifiers should review the Verification Report Template (.docx) (accessible HTML version).

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 will determine whether the conditions specified in subsection 28(1) of the OBPS Regulations are met before issuing a permit. 

To apply for a permit, submit an application to the Minister 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.

Use this form to submit an application for permit (xls; 267 kB).

Request for confidentiality

Environment and Climate Change Canada may publish any information submitted in annual and verification reports.

Under section 254 of GGPPA, persons responsible for covered facilities may request that the information submitted in these reports be treated as confidential. Use this form to submit a request for confidentiality (PDF).

Compensation, Credits and Credit and Tracking System

Compensation obligation

Persons responsible for covered facilities under the Output-Based Pricing System (OBPS) must provide compensation for excess emissions (greenhouse gas (GHG) emissions that exceed the facility's annual emissions limit).

Compensation can be provided by:

  1. making an excess emissions charge payment electronically to the Receiver General for Canada,
  2. remitting compliance units, namely surplus credits, federal offset credits, or recognized units, or
  3. a combination of both methods.

Compensation deadlines

The regular-rate compensation deadline is December 15 of the calendar year following the compliance period.  After this date, the total remaining compensation obligation increases by a factor of 4. 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) tracks:

  • compliance obligations,
  • credit issuance and transfers,
  • remittance of compliance units and
  • excess emissions charge payments.

Opening an OBPS Account in CATS

The authorized official named in the application to register the facility must open an OBPS Account in CATS. The OBPS Operations Office will email instructions and copy the contact person listed in the registration application. Once the authorized official opens the OBPS Account in CATS, they can add additional users.

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 before applying to open an OBPS Account in CATS.

Any other person may open accounts in CATS as an Other Market Participant (OMP). The OMP account type is intended for entities such as brokers, traders, and companies not regulated under the federal OBPS who wish to own and manage surplus credits or federal offset credits, to track their credit transactions. For more information on OMP accounts, visit the Tracking System and Public Registry page of Canada’s Greenhouse Gas Offset Credit System.

Making an excess emissions charge payment

Use CATS to initiate excess emissions charge payments before making a wire transfer or direct deposit. Log in to CATS and follow the instructions in the User Guide for:

  • initiating a payment,
  • making a wire transfer or direct deposit through your financial institution, and
  • the follow-up steps required in CATS.

Issuing surplus credits

Under section 175 of the Greenhouse Gas Pollution Pricing Act and in accordance with the Output-Based Pricing System Regulations (OBPS Regulations), the Minister of Environment and Climate Change (the Minister) issues surplus credits to persons responsible for covered facilities whose emissions are lower than the applicable emissions limit, provided:

  • the emissions limit is calculated in accordance with the OBPS Regulations,
  • no material discrepancy exists with respect to the quantity of GHGs and production reported, and
  • the Minister did not establish the emissions limit or determine the quantity of GHGs emitted from the covered facilities for the compliance period. 

The Minister will issue surplus credits to an OBPS Account in CATS. If ECCC identifies errors and requires corrections, ECCC may revoke previously issued surplus credits or assign compensation obligations.

Transferring surplus credits

Use the CATS Buy and Sell Board to post a message to buy or sell surplus credits. 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 compliance units (surplus credits and offsets credits).

Limitations on surplus credits eligible for remittance

New Brunswick, Ontario and Saskatchewan were removed from Part 2 of Schedule 1 to GGPPA as of January 1, 2021, January 1, 2022, and January 1, 2023, respectively. As a result:

  • surplus credits issued to a facility in New Brunswick are not eligible for remittance for the 2021 or subsequent compliance periods,
  • surplus credits issued to a facility in Ontario are not eligible for remittance for the 2022 or subsequent compliance periods, and
  • surplus credits issued to a facility in Saskatchewan are not eligible for remittance for the 2023 or subsequent compliance periods.

Each surplus credit’s serial number identifies the province of the facility to which the surplus credit was issued. Section 6.1 “Viewing Surplus Credits” of the User Guide in CATS outlines how to read and understand the serial number.

Remitting federal offset credits

Purchases of federal offset credits occur through bilateral agreements between buyers and sellers. Once purchased, these credits can be transferred to your OBPS Account and you can remit them in CATS. The User Guide in CATS provides specific instructions on remitting compliance units (surplus credits and offset credits).

Further information on Canada's GHG Offset Credit System and the federal offset protocols is available on the Canada's GHG Offset Credit System web page. Information on registered projects and federal offset credits is available on Canada’s Greenhouse Gas Offset Credit System Public Registry.

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 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. The User Guide in CATS provides specific instructions for remitting recognized units.

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

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).

Closed comment period

For further information, please contact the OBPS Operations Office.

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2025-12-05