Proposal for the Output-Based Pricing System Regulations: chapter 6

Section 173 of the Act requires that, for each compliance period, a person responsible for a covered facility provides a report to the Minister that includes information that will be specified in the regulations. The regulations will specify the form and manner related to the submission of the report, including the deadline for submitting the report, which will be in the year following the compliance period.

The regulations will require a person responsible for a covered facility to quantify greenhouse gas emissions from specified emission types at the facility (including greenhouse gases that are deemed to have been emitted by the facility) and production data for that facility using prescribed methodologies and to report on those. The regulations will also require the person to include in the facility report the greenhouse gas emissions limit that applies to the covered facility.

In addition, section 173 of the Act requires a person responsible for a covered facility to have the report verified by a third party. The third-party verification body will have to be accredited to the ISO Standard 14065:2013 by any of the accreditation organizations specified in the regulations, and conduct the verification in accordance with ISO Standard 14064-3:2006 and with other requirements outlined in the regulations. The regulations will require that a verification report, including the verification statement and prescribed information, be submitted to the Minister in accordance with the prescribed form and manner and at the same time as the facility report.

The regulations will replace the Information Order by replicating its requirements, as appropriate.

Reporting deadline

10. (1) The person responsible for a covered facility must submit a facility report for that facility, and a verification report in relation to that report for the facility, on or before June 1 of the year following the compliance period for which the reports are being made.

Content of the facility report

(2) The facility report must contain the following information:

1. the information listed in Schedule 1 of the Greenhouse Gas Emissions Information Production Order, and whether section 17 applies to the facility;
2. for a covered facility to which any of the parts of the Greenhouse Gas Emissions Information Production Order apply other than Part 8,
   1. the total quantity of each greenhouse gases—and the total combined quantity of those greenhouse gases—emitted by the covered facility, in tonnes of CO₂e, during the applicable compliance period as determined in accordance with subsection 12(b) of that Order, or, where an OBS determined in section 17 of these regulations applies to the facility, consistent with the methods used to quantify emissions under section 17.
   2. the amount of each type of product produced by the covered facility during the applicable compliance period as determined in accordance with subsections 9(1) and (2) of that Order, or, where an OBS determined in section 17 of the regulations applies to the facility, consistent with the methods used to quantify production for the activity under section 17;
3. for a covered facility to which Part 8 of the Greenhouse Gas Emissions Information Production Order applies,
   1. the total quantity of greenhouse gases emitted by each unit of a covered facility during the applicable compliance period as determined in accordance with subsection 13(b) of that Order,
   2. the gross amount of electricity generated from gaseous fuel, liquid fuel and solid fuel by each unit within a facility, during the applicable compliance period as determined in accordance with subsection 10(1) of that Order and expressed separately,
   3. the sum of the total quantity of greenhouse gases emitted by each unit within the facility during the applicable compliance period, expressed in tonnes of CO₂e, and,
   4. the sum of the total amount of electricity generated by each unit within the facility during the applicable compliance period;
4. for a covered facility that produces and sells thermal energy, the following information for each covered facility to which the thermal energy was sold:
   1. the name of the covered facility and covered facility certificate number that was issued to it,
   2. the quantity of thermal energy sold in the compliance period by the facility, expressed in gigajoules (GJ), calculated in accordance with paragraphs 9(3)(a) or 10(2)(a) of the Greenhouse Gas Emissions Information Production Order and as well as the thermal energy’s temperature and pressure, or where an OBS determined in section 17 applies to the facility, consistent with the methods used to quantify thermal energy sold under section 17, and
   3. the ratio of heat from the combustion of fossil fuel for the facility during the compliance period calculated in accordance with subsection 9(4) or (6) or paragraph 10(2)(b) of the Greenhouse Gas Emissions Information Production Order, or where an OBS determined in section 17 of these regulations applies to the facility, consistent with the methods used to quantify the ratio of heat from the combustion of fossil fuel under section 17,
5. for a covered facility that purchases thermal energy, the following information for each covered facility from which the thermal energy was bought:
   1. the name of the covered facility and covered facility certificate number that was issued to it,
   2. the quantity of thermal energy bought in the compliance period, expressed in gigajoules (GJ), calculated in accordance with section 17.1 of the Greenhouse Gas Emissions Information Production Order and as well the thermal energy’s temperature and pressure, if available, or where an OBS determined in section 17 of these regulations applies to the facility, consistent with the methods used to quantify the quantity of thermal energy purchased under section 17, and
   3. the ratio of heat from the combustion of fossil fuel for the facility during the compliance period calculated in accordance with section 17.1 of the Greenhouse Gas Emissions Information Production Order, if available;
6. for a covered facility to which the formula set out in section 17 of these regulations applies and for only the first facility report submitted by the facility,
   1. the calculated OBS that applies to the facility, as calculated in accordance with section 17, and
   2. the information associated with each term in the formula and the methods used to derive this information;
7. the GHG emissions limit, expressed in tonnes CO₂e, that applies to the covered facility for the applicable compliance period, as determined in accordance with section 16 of these regulations; and
8. the result of the assessment of the net greenhouse gases emitted by a covered facility against the GHG emissions limit applicable to that facility for the applicable compliance period, expressed in tonnes of CO₂e, and as determined in accordance with section 19 of these regulations.

Verification

11. (1) The person responsible for a covered facility must have the facility report verified by a verification body that:

1. meets the following requirements:
   1. it is accredited as a verification body at the organizational level to the ISO Standard 14065:2013—with a scope of accreditation that corresponds to the covered facility’s operations and activities, which may include permanent storage of carbon dioxide—by the Standards Council of Canada, the American National Standards Institute, or any other accreditation organization that is a member of the International Accreditation Forum, and
   2. it is not under investigation or suspended by an accreditation organization that issued an accreditation; and
2. meets the following verification process requirements:
   1. it conducts the verification in accordance with ISO Standard 14064-3:2006, excluding clauses 4.3.1 and 4.3.5, and
   2. expresses an opinion to a reasonable level of assurance on whether the GHG emissions, the amount of each product produced and emissions limit—as reported by a person responsible for the covered facility in the facility report—are free from material errors or omissions, and whether the report was prepared in accordance with these regulations.

Conflict of interest

(2) The person responsible for a covered facility must ensure that:

1. if the verification body has verified six consecutive facility reports prepared with respect to the facility under these regulations, the verification body must wait at least three years before verifying another facility report for a person responsible; and
2. there exists no current or potential conflict of interest between the person and the accredited verification body, including members of the verification team and any individual or corporate entity associated with the verification body, that is a threat to or compromises the accredited verification body’s impartiality that cannot be effectively managed.

Facility visits

(3) The person responsible for a covered facility must ensure that its facility is visited by a verification body for the purpose of carrying out the verification activities if:

1. it is the initial verification for a covered facility under these regulations;
2. it is a subsequent verification of the facility for which the verification body does not have knowledge of the prior verification activities and results;
3. there has been a change in ownership of the covered facility;
4. errors or omissions have been identified during the verification that indicate a need to visit the facility;
5. there are unexplained material changes in reported GHG emissions, the amount of each product produced, or permanent storage of carbon dioxide, since the previous verified report;
6. there are new GHG emissions sources or products produced at the facility since the submission of the previous report that are material to the current report;
7. there are material changes to the boundary of the facility, which resulted in the submission of a notice of change to the boundary of the facility during the compliance period;
8. there are material changes in the management of data and information at the facility;
9. the facility has not been visited by the verification body as part of carrying out the verification of the last two facility reports prepared under these regulations;
10. at least three calendar years have passed since the verification body provided verification services for the facility;
11. the last verification report for the covered facility prepared under these regulations included an adverse verification statement; or
12. the verification body is of the opinion a site visit is required.

Material discrepancy

(4) For the purpose of the verification of a facility report, a person responsible for the facility must ensure that the following materiality thresholds are used by the verification body to identify a material discrepancy:

1. with respect to GHG emissions from covered facilities that have an annual quantity of emissions of GHG of less than 500 kt of CO₂e,
   1. in the case of each error or omission respecting GHG emissions, that is identified during the verification and that may be quantified, the result, expressed as a percent, determined in accordance with the following formula, is equal to or greater than 5%:
      
      A/B × 100
      
      where
      A is the overstatement or understatement resulting from the error or omission, as an absolute value, expressed in tonnes of CO₂e, and
      B is the total quantity of GHG emissions, expressed in tonnes of CO₂e;
      
   2. in the case of the aggregate of all errors and omissions respecting GHG emissions, that is identified during the verification and that may be quantified, the result, expressed as a percent, determined in accordance with the following formula, is equal to or greater than 5%:
      
      A/B × 100
      
      where
      A is the absolute value of the net result of all overstatements and understatements resulting from all errors and omissions, expressed in tonnes of CO₂e, and
      B is the total quantity of GHG emissions, expressed in tonnes of CO₂e;
       
2. with respect to GHG emissions from covered facilities that have an annual quantity of emissions of GHG that is equal to or greater than 500 kt of CO₂e,
   1. in the case of each single error or omission respecting GHG emissions, that is identified during the verification and that may be quantified, the result, expressed as a percent, determined in accordance with the following formula, is equal to or greater than 2%:
      
      A/B × 100
      
      where
      A is the overstatement or understatement resulting from the error or omission, as an absolute value, expressed in tonnes of CO₂e, and
      B is the total quantity of GHG emissions, expressed in tonnes of CO₂e; and
      
   2. in the case of the aggregate of all errors and omissions respecting GHG emissions, that is identified during the verification and that may be quantified, the result, expressed as a percent, determined in accordance with the following formula, is equal to or greater than 2%:
      
      A/B × 100
      
      where
      A is the absolute value of the net result of all overstatements and understatements, expressed in tonnes of CO₂e, and
      B is the total quantity of GHG emissions, expressed in tonnes of CO₂e; and
       
3. with respect to each product that must be quantified under these regulations, in the case of an error or omission that is identified during the verification and may be quantified, the result, expressed as a percent, determined in accordance with the following formula, is equal to or greater than 0.1%:
   
   A/B × 100
   
   where
   A is the overstatement or understatement resulting from the error or omission, as an absolute value, expressed in the applicable unit of measure, and
   B is the amount of the product produced, expressed in the applicable unit of measure.

Content of verification report

(5) A verification report must be prepared by the verification body in relation to the facility report and any related records, and must include the information outlined Schedule 2.

Submission of verification report

(6) The verification report required under subsection (5) must be prepared in accordance with Schedule 2 and submitted along with the facility report required under subsection 10(1).

Form of report

12. Any report submitted to the Minister must be submitted in the form and format specified by the Minister.

Updates of administrative information

13. (1) If there is a change to any administrative information, such as that required under sections 1 and 2 of Schedules 1 or 2 of the Greenhouse Gas Emissions Information Production Order, a person responsible for the covered facility must notify the Minister, in writing, within 30 days of the change.

Updates to facility boundaries

(2) If there is a change to the boundary of the covered facility, a person responsible for the covered facility must notify the Minister of the change, in writing, and provide an updated map of the covered facility within 30 days of the change.