The federal output-based pricing system (OBPS) was designed by Environment Canada and Climate Change to address the Greenhouse Gas Pollution Pricing Act (S.C. 2018, c. 12, s. 186). The OBPS program has been implemented as an incentive for large industrial emitters to reduce their greenhouse gas (GHG) emissions.

The federal OBPS applies to facilities that meet all the criteria below.

  1. Are located in the following jurisdictions:
    • Ontario
    • New Brunswick
    • Manitoba
    • Prince Edward Island
    • Saskatchewan
    • Yukon
    • Nunavut
  2. Have reported 50 kt of CO2e or more in 2014 or in subsequent years to the Greenhouse Gas Reporting Program (GHGRP)
  3. Carry out a covered activity (defined below)
    • for a natural gas pipeline transmission system, transmitting natural gas;
    • for a petroleum refinery, the processing of crude oil, including bitumen, heavy crude oil, light crude oil and synthetic crude oil or secondary petroleum products;
    • for any other facility,
      • the production of anhydrous ammonia or aqueous ammonia by the steam reforming of a hydrocarbon,
      • the production of nitric acid by the catalytic oxidation of ammonia,
      • the smelting or refining, from feedstock that comes primarily from ore, of at least one of the following metals: nickel, copper, zinc, lead, or cobalt,
      • the extraction, processing and production of bitumen or crude oil,
      • the upgrading of bitumen or heavy oil to produce synthetic crude oil,
      • the production of cement from clinker,
      • the production of grain ethanol for use in industrial applications or as fuel,
      • production of ethanol by distillation for human consumption,
      • the industrial processing of potatoes or oilseeds for human or animal consumption,
      • the generation of electricity using fossil fuels,
      • the production of iron ore pellets from iron ore concentrate,
      • the production of steel from feedstock that comes primarily from scrap iron or steel, other than such production in a foundry,
      • the production of lime from limestone using a kiln,
      • the production of metal or diamonds from the mining or milling of ore or kimberlite,
      • the production of coal by mining coal deposits,
      • the calcining of coal to produce char,
      • the production of activated carbon from coal,
      • the processing of natural gas, including processing to produce natural gas liquids,
      • the production of potash from the mining and refining of potash ore,
      • the production of pulp from wood, other plant material or paper or any product derived directly from pulp or a pulping process,
      • the production of brick or other products made from clay or shale using a kiln,
      • the production of tubes from metal,
      • the production of iron or steel from smelted iron ore, or the production of metallurgical coke,
      • the production of glass using a furnace,
      • the production of panels primarily containing gypsum,
      • the production of mineral wool insulation,
      • the production of hydrogen gas using steam hydrocarbon reforming or partial oxidation of hydrocarbons,
      • the production of resins or fibres of Nylon 6 or Nylon 6,6,
      • the production of carbon black pellets, powders or other products, using thermal oxidation or thermal decomposition of hydrocarbon feedstock,
      • the production of citric acid,
      • the production of 2-methylpentamethylenediamine,
      • the production of petrochemicals from feedstocks derived from petroleum or from petroleum and liquefied natural gas, including high-value chemicals, aromatic cyclic hydrocarbons, higher olefins, hydrocarbon solvents, ethylbenzene, styrene, polyethylene, ethylene oxide and ethylene glycols, but excludes the production of petrochemicals from biomass feedstocks or as a by-product,
      • the production of vaccines for human or animal use,
      • the production of refined sugar from raw cane sugar,
      • the processing of corn through wet milling, and
      • the assembly of four-wheeled self-propelled vehicles that are designed for use on a highway and that have a gross vehicle weight rating of less than 4,536 kg (10,000 pounds).

Voluntary Participation in the Output-Based Pricing System (opt-in)

Facilities in the seven backstop jurisdictions with annual emissions between 10 kt CO2e and 50 kt CO2e and that carry out an activity for which an output-based standard has been prescribed will be able to opt-in OBPS starting with the January 1 to December 31, 2020 compliance period.

Compliance Obligations

Facilities subject to the regulation will be required to meet compliance obligations for excess emissions by:

  1. paying an emissions charge  at $20 per tonne CO2e owed in 2019 (increasing by $10 per tonne CO2e each year to $50 per tonne CO2e in 2022)
  2. ubmitting surplus credits issued by the federal government through OBPS program
  3. submitting offset credits (currently excludes any provincially issued credits)
  4. submitting a combination of any of the above three compliance options

Registering a Facility to the Output-Based Pricing System

Starting November 1, 2018 applications for registration can be submitted through the SWIM system. Successful applicants will receive a covered facility certificate.

Relevant link to the OBPS:

https://www.canada.ca/en/environment-climate-change/services/climate-change/pricing-pollution-how-it-will-work/output-based-pricing-system/registering-facility.html

If you have any questions or concerns about the GHG program or require Trinity's assistance, please feel free to contact Suzy Sabanathan at (416) 391-2527 ext. 22.