Proposal for the Output-Based Pricing System Regulations: chapter 10

The regulations will provide a formula to calculate an output-based standard for covered facilities undertaking industrial activities. This calculated output-based standard will be used in the calculation of the limit for GHG emissions described in the section above for some covered facilities. This formula may be used in cases where a sector has only one or a very few facilities and where publication of an OBS may pose confidentiality concerns. It may also be used to calculate an OBS for industrial activities that are not covered activities.

Where this formula applies, the OBS value will be calculated the first year the facility is a covered facility. This value will then be used in the calculation of the limit for GHG emissions in the first and subsequent years.

Calculated OBS

17. The OBS for an activity described in an Application to be Designated as a Voluntary OBPS Participant, and the OBS for an activity that has an OBS listed in column 6 of Schedule 1 as Calculated, are calculated as follows:

${\displaystyle {\text{OBS}}_{\text{Activity,}i}=\frac{\sum _{\text{Y}={\text{RY}}_1}^{{\text{RY}}_n}\left({\text{Emissions}}_{\text{fac,Y}}-{\text{Emissions}}_{\text{elec,Y}}-{\text{Allocation}}_{\text{NetTherm,Y}}-\sum _j{\text{Emissions}}_{\text{Other Cov Act,Y,}j}-\sum _k{\text{Emissions}}_{\text{OtherEligAct,Y,}k}\right)}{\sum _{\text{Y}={\text{RY}}_1}^{{\text{RY}}_n}{\text{Production}}_{\text{Y,}i}}\times {\text{Factor}}_{\text{red}}}$

where

RY are the reference years RY₁ to RY_n and are

1. for a facility where there has been a submission of the Application to be Designated as a Voluntary OBPS Participant, n is the number of reference years reported under that application and RY₁ to RY_n are the reference years reported under that application,
2. for a new facility to whom section 18 applies, n is equal to 2 and RY₁ and RY₂ are the first two full calendar years of production,
3. for a facility that is subject to the OBPS in 2019 and to which subsections (a) and (b) do not apply, n is equal to 1 and RY₁ is the year 2019, and
4. in all other cases, n is equal to 1 and the reference year RY₁ is the first year the facility is subject to the OBPS.

Emissions_{fac, Y} is the emissions from the facility for each of the reference years. The facility emissions for each reference year must be quantified in accordance with subsection 6(1) of the Greenhouse Gas Emissions Information Production Order, or in the case of a facility carrying out an eligible activity, in accordance with the method used to quantify the GHG emissions from the facility in the Application to be Designated as a Voluntary OBPS Participant for the eligible activity;

Emissions_{elec, Y} is the emissions from the generation of fossil fuel-fired electricity generated at the facility for each of the reference years. The emissions from the generation of fossil fuel electricity for each reference year must be quantified in accordance with subsection 6(4) of the Greenhouse Gas Emissions Information Production Order, or in the case of a facility carrying out an eligible activity, in accordance with the method used to quantify the emissions from the generation of fossil fuel-fired electricity generated at the facility in the Application to be Designated as a Voluntary OBPS Participant for the eligible activity;

Allocation_{NetThermal, Y}, is the allocation for net thermal energy for each of the reference years and is

1. calculated in accordance with the formula, unless paragraph (b) applies:
   
   Allocation_{Net Thermal, Y} = Allocation_RateTE × (Sales_Y – Purchases_Y) × RH_Y
   
   where
   
   Allocation Rate_TE is equal to 0.062 t/GJ;
   
   Purchases_Y is, for a facility whose main activity is a covered or eligible activity the quantity of purchases of thermal energy, expressed in GJ, that is purchased from a covered facility in each reference year. The quantity of purchases of thermal energy for each reference year must be quantified in accordance with section 17.1 of the Greenhouse Gas Emissions Information Production Order, or in the case of a facility carrying out an eligible activity, in accordance with the method used to quantify the purchases of thermal energy in the Application to be Designated as a Voluntary OBPS Participant for the eligible activity;
   
   Sales_Y is the sales of thermal energy from a covered facility to a facility whose main activity is a covered or eligible activity in each of the reference years. The quantity of sales of thermal energy for each reference year must be quantified pursuant to paragraph 9(3)(a) or 10(2)(a) of the Greenhouse Gas Emissions Information Production Order, or in the case of a facility carrying out an eligible activity, in accordance with the method used to quantify sales of thermal energy in the Application to be Designated as a Voluntary OBPS Participant for the eligible activity;
   
   RH_Y is the ratio of heat from the combustion of fossil fuel for the reference year Y,
   
   where
    
   1. If Sales_Y is greater than Purchases_Y,RH_Y is the ratio of heat from the combustion of fossil fuel for the facility for the reference year Y, quantified in accordance with subsection 9(4) or (5) or paragraph 10(2)(b) of the Greenhouse Gas Emissions Information Production Order, or in the case of a facility carrying out an eligible activity, in accordance with the method used to quantify the ratio of heat from the combustion of fossil fuel in the Application to be Designated as a Voluntary OBPS Participant for the eligible activity, or where none can be calculated, RH is equal to 1, and
   2. If Sales_Y is less than Purchases_Y, RH_Y is the ratio of heat from the combustion of fossil fuel for the year Y quantified in accordance with section 17.1 of the Greenhouse Gas Emissions Information Production Order, or in the case of a facility carrying out an eligible activity, in accordance with the method used to quantify the ratio of heat from the combustion of fossil fuel in the Application to be Designated as a Voluntary OBPS Participant for the eligible activity, or where none can be calculated, RH is equal to 1; or
2. if

${\displaystyle \frac{\sum _{\text{Y}={\text{RY}}_i}^{{\text{RY}}_n}{\text{Allocation}}_{\text{NetTherm,Y}}}{n}<0.015\times \frac{\sum _{\text{Y}={\text{RY}}_i}^{{\text{RY}}_n}{\text{Emissions}}_{\text{fac,Y}}}{n}}$ ,

Allocation_{NetTherm, Y} = 0 for all Y;

Emissions_{OtherCovAct, Y, j} is the emissions for each reference year Y that is associated with each of the j covered industrial activities undertaken at the facility. It does not include the emissions associated with the covered industrial activity i that the OBS is being calculated for, or any fossil fuel fired electricity generated on-site. The emissions associated with each covered industrial activity j for each reference year must be quantified in accordance with subsection 6(3) of the Greenhouse Gas Emissions Information Production Order or in the case of a facility that also carries out an eligible activity, in accordance with the method used to quantify the GHG emissions associated with other covered activities in the Application to be Designated as a Voluntary OBPS Participant for the eligible activity;

Emissions_{OtherEligAct, Y, k} is the emissions for each reference year Y that is associated with each eligible activity k undertaken at the facility but not including the activity i the OBS is calculated for or any fossil fuel fired electricity generated onsite. Emissions for each eligible activity k and for each reference year Y must be quantified in accordance with the method used to quantify this information in the Application to be Designated as a Voluntary OBPS Participant for the eligible activity;

Production_{Y, i} is

1. where the activity i is a covered industrial activity, the production for the covered industrial activity i for each reference year Y quantified in accordance with section 9(1) of the Greenhouse Gas Emissions Information Production Order, and
2. in any other case, the production for the eligible activity i for each of the reference years Y must be quantified in accordance with the method used to quantify this information in the Application to be Designated as a Voluntary OBPS Participant for the eligible activity i for each reference year Y; and

Factor_red is the factor pertaining to the required GHG emissions reduction and equals

1. 95% for a covered industrial activity listed in items 8 and 18 of Schedule 1;
2. 90% for a covered industrial activity listed in items 13, 16, 17, 23 and 24 of Schedule 1; and
3. 80% for all other activities not listed in paragraphs (a) or (b).