BP Canada Energy Group ULC …

BP Canada Energy Group ULC (BP) applauds Ontario’s intent to establish a modern and practical climate policy framework. BP supports the criteria Ontario has identified in designing its gasoline renewable fuel standard program (RFS Program), specifically around flexibility in compliance mechanisms and transparency.

BP believes that flexible compliance mechanisms are necessary to deliver a market-based compliance program that supports innovation and is sustainable. Activities that lower the carbon intensity of conventional transportation fuels should be eligible for compliance purposes. If these activities are accommodated in the rule, it would incentivize participants to seek out gasoline and renewable fuel suppliers (and other inputs into the supply chain) who can provide the best value, from a low carbon intensity perspective. Increased diversity and demand of low carbon gasoline and renewable fuels will send a strong market signal to suppliers to innovate from current standards and make technological advancements. Additionally, compliance diversity provides choice and promotes healthy market-based competition to achieve even greater low carbon intensity goals, and also provides commercial efficiency by allowing participants to choose the path that best complements their business strategy and commercial risk appetite.

BP notes that Ontario intends to preserve the renewable fuel content obligation as required by the Ethanol in Gasoline Regulation. One potential concern is how this will interact with any low carbon standard obligation, and that it could deter or delay stakeholder investment in low carbon intensity fuels. To overcome this uncertainty, BP suggests that Ontario integrate the renewable fuel content and low carbon standard elements to create a single, simplified market mechanism. This harmonization would create greater certainty, and would attract investment and simplify participant economics. Further, based on our experience under other programs where a BP affiliate is both an obligated party and a biofuel blender, we would welcome the opportunity to share a more detailed perspective with policy developers.

BP is also aware that the Government of Canada has announced that it will develop a national clean fuel standard. Where various levels of government seek to regulate the same activity of a participant, harmonization of standards and compliance mechanisms would reduce administrative burden and unnecessary costs. For example, the requirement to validate or verify the carbon intensity of the gasoline or renewable fuel demanded by Ontario and Canada should be the same in order to avoid duplicative measures. The gasoline and renewable fuels supply and demand market is a continental one. Thus, the greater the harmonization among the jurisdictions, the more the Government can reduce regulatory arbitrage and compliance complexities. A coordinated approach would also help minimize compliance errors and unintended breaches of regulatory obligations. Instead, a participant’s efforts and resources would be better utilized in focusing on gains to be made in supporting Ontario’s policy to reduce greenhouse gas emissions.

BP has extensive experience in working with the California and more recently Oregon fuels programs. As such, we believe there are several measures that Ontario could enact to establish a commercially efficient RFS Program that would help all stakeholders to make informed decisions. These include: (a) allow the creation of tradable credits where a participant exceeds its renewable fuel and carbon intensity obligations; (b) establish a registry system that documents the creation of traceable credits which would create liquidity in the credit market, and that effects transfers of credits between participants which would make credit transactions (and thus compliance efforts) easier; (c) publication of current RFS Program data, on an aggregated basis to preserve company confidentiality, such as gasoline production/imports, number of credits created and surrendered, and other data that would help the analysis of market fundamentals and (d) place credit invalidation risk with the credit creator which would enhance the integrity of the credit compliance program.

BP appreciates the opportunity to comment on Ontario’s discussion paper, as you progress to developing a modern renewable fuel standard for gasoline in Ontario. We would welcome the opportunity to share a more detailed perspective with your policy team.

[Original Comment ID: 208686]