Notice of intent to amend the Output-Based Pricing System Regulations


This notice announces the intent to make Regulations amending the Output-Based Pricing System Regulations (the Amending Regulations), made under sections 192 and 193 of the Greenhouse Gas Pollution Pricing Act (the Act). The Amending Regulations would implement amendments to the Output-Based Pricing System Regulations (OBPS Regulations) to ensure continued greenhouse gas (GHG) emissions reductions, reduce the administrative burden, and improve implementation.

Pursuant to section 194 of the Act, the measures referred to in this notice may take effect, if the Amending Regulations so provide, earlier than the day on which the Amending Regulations are made. Subject to Governor in Council approval, it is proposed that these Amending Regulations be made in 2023 and that some of their provisions may take effect as early as the date of publication of this Notice.  

If the Governor in Council makes these Amending Regulations, they would apply to persons responsible for facilities that meet the definition of “covered facility” set out in section 169 of the Act.


The OBPS Regulations, established under Part 2 of the Act, were published in the Canada Gazette, Part II, Vol. 153, No. 14, on July 10, 2019. The Minister of the Environment (the Minister) 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 publication of the regulations in the Canada Gazette, Part II.

As part of the Government of Canada’s commitment to review the OPBS Regulations in 2022, Environment and Climate Change Canada published the Review of the federal Output-Based Pricing System Regulations scoping paper in February 2021. The scoping paper described the principles and the scope of the review. In December 2021, the Government of Canada then published the Review of the OBPS Regulations: Consultation Paper to describe and engage stakeholders on the key proposed amendments to the OBPS Regulations following the 2022 review of the regulations.

The Minister intends to develop regulations amending the OBPS Regulations that would give effect to the potential measures described below, for recommendation to the Governor in Council.

Description of potential measures and relevant provisions

Tightening rate

The federal benchmark refers to the minimum national stringency criteria used by the Government of Canada to assess provincial and territorial carbon pricing systems to ensure that they are fair, consistent and effective. The updated benchmark, published in August 2021, states that “output-based pricing systems for industry must be designed to maintain a marginal price signal equivalent to the minimum national carbon pollution price across all covered emissions.”

The Amending Regulations would amend the formula to calculate the emissions limit to incorporate an annual tightening rate to most output-based standards (OBSs) starting in the 2023 compliance period. This rate would be set to maintain sufficient demand for credits in the OBPS to ensure the marginal price holds, considering expected improvements in response to the carbon price and other measures supporting the transition to a low carbon economy. The tightening rate plays an important role in ensuring the federal OBPS is designed to align with the updated federal benchmark.

OBS Values – global warming potential

Updates to global warming potential (GWP) values set out in Schedule 3 to the Act are coming into force on January 1, 2023. Therefore, the Amending Regulations would update the value of existing OBSs when the change in GWP values would result in a material change in the value of the OBS.

Remote electricity generation

Under the Act and the Fuel Charge Regulations, remote power plant operators that use light fuel oil or marketable natural gas exclusively in the generation of electricity for distribution to the general public in remote communities may benefit from an exemption of paying the fuel charge on fuel delivered for that purpose. The Amending Regulations would clarify that the OBPS Regulations would not apply to a remote power plant that is exempted from paying the fuel charge under the Fuel Charge Regulations.

Calculated output-based standards

The Amending Regulations would make changes to how the calculated OBS under section 37 of the OBPS Regulations are calculated. This would include considering activities engaged in sectors that are not at significant risk of competitiveness impacts resulting from carbon pricing and of carbon leakage, carbon capture and storage, and making adjustments to accounting for thermal energy transfers. Where attributing GHGs between activities is needed, the proposed amendments include requirements to ensure methods are robust and documented. Proposed changes would not affect covered facilities who already have a calculated OBS. They would only affect those that need to calculate an OBS for the first time or to recalculate an OBS. Finally, changes are also proposed to deal with situations where the activities engaged in at the covered facility are changing over time.

Coming into force

The Act permits the Amending Regulations to have effect retroactively. However, the Amending Regulations must not have effect before the day on which this Notice is published.

Page details

Date modified: