Proposal for the Output-Based Pricing System Regulations: chapter 15

The regulations will set out rules respecting the use, suspension, revocation, replacement, transfer, and expiration of compliance units. There are also some limitations on the use of compliance units to maintain the carbon pollution price signal and drive emission reductions and investment.

Expiration of surplus credits

25. (1) A surplus credit issued by the Minister is only valid compensation for excess emissions of the covered facility if remitted within five calendar years following the calendar year for which the credit was issued.

Expiration of offset credits

(2) An offset credit issued by the Minister is only valid compensation for excess emissions of the covered facility if remitted within eight calendar years following the calendar year in which the credit’s GHG emission reduction or removal took place.

Expiration of recognized units

(3) A recognized unit from another jurisdiction is only valid for compensation for excess emissions of the covered facility if remitted within eight calendar years following the calendar year during which the unit’s GHG emission reduction or removal took place.

Compliance units issued in error – application

26. (1) This section only applies to compliance units that have been issued by the Minister under Part 2 of the Act and exist in the tracking system established in accordance with section 185 of the Act.

Suspension of compliance units

(2) The Minister may suspend a compliance unit held by the original recipient when the Minister has reasonable grounds to believe that the unit has been issued in error, issued on the basis of false or misleading information, or found to be invalidated through double-counting, reversal of GHG reductions or removals, or any other means.

Review of compliance units

(3) If additional review by the Minister substantiate that a suspended compliance unit

1. was issued in error or has been invalidated, the Minister may revoke the compliance unit in the tracking system making it ineligible to be used to meet a compensation obligation or transferred; or
2. was not issued in error or is valid, the Minister must unsuspend the compliance unit, and the compliance unit may be used pursuant to these regulations.

Replacement of compliance units if issued in error

(4) For the purpose of subsection 181(1) of the Act, the Minister may request that a person to whom the Minister has issued a compliance unit in error—including on the basis of false or misleading information—that has been remitted as compensation or has been transferred to another person to replace the compliance unit within 30 days of the revocation date

1. by remitting another compliance unit; or
2. by paying the emissions charge at the rate specified in subsection 181(3) of the Act.

Invalid units from other jurisdictions

27. (1) For a recognized unit from another jurisdiction, the Minister may not recognize the unit or credit as compensation if there are reasonable grounds to believe the unit or credit has been invalidated by any means, including, but not limited to: double-counting, reversal of GHG reductions or removals, or false or misleading information or quantification errors.

If recognized unit is invalidated

(2) For a recognized unit from another jurisdiction remitted to the Minister for the purpose of compensation, which has subsequently been invalidated for any reason, including a unit issued in error by the other jurisdiction, the Minister must require the responsible person that remitted the recognized unit to ensure its compensation obligation continues to be met by:

1. replacing the recognized unit with a valid compliance unit within 30 days of a notification from the Minister; or
2. paying the excess emissions charge within 30 days of a notification from the Minister at the rate specified in subsection 181(3) of the Act.