Share your thoughts: 2022 Review of the Output-Based Pricing System Regulations

Current status: Closed

Environment and Climate Change Canada (ECCC) sought feedback on the proposed Regulations Amending the Output-Based Pricing System Regulations and the Environmental Violations Administrative Monetary Penalties Regulations.

Opened on October 29, 2022, and was closed to new input on December 28, 2022.

ECCC also sought feedback on the proposed Revised Policy regarding voluntary participation in the Output-Based Pricing System, Policy for recognizing additional industrial activities from sectors at significant risk of carbon leakage and competitiveness impacts and List of recognized additional industrial activities under the Output-Based Pricing System.

Opened on November 28, 2022, and was closed to new input on January 27, 2023.

Background

As part of the Government of Canada’s commitment to review the federal Output-Based Pricing System Regulations (the OBPS Regulations) in 2022, a consultation paper was published in December 2021 to describe and engage stakeholders on Environment and Climate Change Canada’s (ECCC) key proposed amendments to the OBPS Regulations. The 2022 Review was launched in February 2021 with the release of a scoping paper describing the principles and scope of the review.

Proposed Regulations Amending the Output-Based Pricing System Regulations and the Environmental Violations Administrative Monetary Penalties Regulations

In August 2021, the Government of Canada updated the federal benchmark for the 2023–2030 period. In light of the 2022 review, the minimum national carbon pollution price increase and the updated benchmark, ECCC proposes the Regulations Amending the Output-Based Pricing System Regulations and the Environmental Violations Administrative Monetary Penalties Regulations (the proposed Amendments). The proposed Amendments aim to ensure the OBPS continues to contribute to Canada’s greenhouse gas (GHG) emissions reduction goals while mitigating risks of carbon leakage and competitiveness impacts due to carbon pricing, and to improve its implementation and effectiveness.

A Notice of Intent to Amend the Output-Based Pricing System Regulations was published on October 28, 2022, which would allow certain amendments to come into force prior to the finalization of the proposed Amendments. This Notice of Intent is not part of this comment period.

Voluntary Participation in the Output-Based Pricing System

The proposed Amendments propose changes that impact voluntary participation in the Output-Based Pricing System (OBPS). If the proposed Amendments are approved, revisions will be required to the Voluntary participation policy for Output-Based Pricing System. The following documents set out the proposed changes to the voluntary participation process and are being posted for comment.

• The proposed Revised Policy regarding voluntary participation in the Output-Based Pricing System outlines the considerations to be taken into account when seeking designation as a covered facility. If approved this policy would come into effect upon registration of the final amendments to the OBPS Regulations.
• The proposed Policy for recognizing additional industrial activities from sectors at significant risk of carbon leakage and competitiveness impacts outlines the considerations that would be taken into account when recognizing additional industrial activities under the OBPS.
• The List of recognized additional industrial activities under the Output-Based Pricing System includes activities that would be proposed for recognition by the minister. If approved, the additional industrial activities would be applicable to covered facilities starting in the 2024 compliance period.

Quantification Methods for the Output-Based Pricing System Regulations

The proposed Amendments to the OBPS Regulations would remove detailed quantification methods from Schedule 3 and moved them to the Quantification Methods for the Output-Based Pricing System Regulations (Quantification Methods), a document incorporated by reference into the OBPS Regulations. The Quantification Methods document specifies the methods to quantify GHGs as seen currently in Schedule 3 for activities set out in Schedule 1 of the OBPS Regulations. The goal of these amendments are to reduce the administrative burden by enabling improved harmonization of quantification methods for GHG emissions between the OBPS Regulations and the federal Greenhouse Gas Reporting Program (GHGRP), as well as to provide flexibility to the Minister to develop and update the specified methods as needed.

The Quantification Methods would apply to the 2024 and future compliance periods. An early version is available to illustrate the new approach proposed in the amendments. This version will not apply to any annual report under the OBPS but is useful to support understanding of proposed amendments to the OBPS Regulations. In spring 2023, ECCC plans to publish for comment a draft version of the Quantification Methods proposed to apply in the 2024 compliance period. The Quantification Methods applicable to the 2024 compliance period would then be finalized and published in late 2023.

Join in: how to participate

Interested parties are encouraged to provide feedback on the proposed Regulations Amending the Output-Based Pricing System Regulations and the Environmental Violations Administrative Monetary Penalties Regulations using the Online Regulatory Consultation System on the Canada Gazette website until December 28, 2022.

Interested parties are also encouraged to provide feedback on the proposed Revised Policy regarding voluntary participation in the Output-Based Pricing System, Policy for recognizing additional industrial activities from sectors at significant risk of carbon leakage and competitiveness impacts and List of recognized additional industrial activities under the Output-Based Pricing System by sending comments to tarificationducarbone-carbonpricing@ec.gc.ca until January 27, 2023.

Related information

• Output-Based Pricing System Regulations
• Update to the Pan-Canadian Approach to Carbon Pollution Pricing 2023-2030
• Review of the federal Output-Based Pricing System Regulations
• Review of the OBPS Regulations: Consultation paper
• Notice of Intent to Amend the Output-Based Pricing System Regulations on October 28, 2022
• Voluntary participation policy for Output-Based Pricing System

Contact us

Environment and Climate Change Canada
Carbon Markets Bureau
351 Saint-Joseph Boulevard
Gatineau, Québec,  K1A 0H3
Email: tarificationducarbone-carbonpricing@ec.gc.ca