Please accept these comments…

Please accept these comments as part of the public consultation on the proposed Emission Performance Standards.

Section 8 - Questions for Discussion:

Q2 and Q3 – The three mechanisms outlined in section 4 are all acceptable. However, those industries receiving compliance units for emissions beyond their AEL should not be allowed to indefinitely bank them for future use or for future trading. Doing so over a significant period of time will gradually become a disincentive from them to continue making improvements. Similarly, there needs to be a limit on the use of compliance units, that is, a maximum percentage liability that can be covered by them. A limit of 75% (as per the federal OBPS) may be a starting point for debate. Again, the intent is to encourage industries to make real efforts at reducing emissions, rather than relying on others, particularly those voluntarily making reductions, i.e., reducing free-riding.

Q4 – The threshold for mandatory inclusion should be set at 50,000 tonnes CO2e/year with a voluntary threshold of 10,000 tonnes CO2e/year.

Q6 – It is reasonable that the stringency factors for fixed process emissions be higher on balance than for non-fixed. However, the proposed factors for non-fixed emissions are higher than needed, particularly those through 2021. The risk of carbon leakage is over-stated for many sectors (see 1st link below - pages 5 - 6, Output-based standards) and the more lenient factors in the EPS proposal will reduce Ontario’s effectiveness at reducing GHG emissions. The factors should be those of the federal OBPS: high EITE (90%) and medium/low EITE (80%).

Other Comments:

1. Sec. 3.1.2.1 - The electricity generation utilities-‘fossil fuel’- standard of 420 tonnes/GWh is too high. Rather than incentivizing investment in clean, renewable technology, it will lead to development of more natural gas generation, which is not conducive to meeting our Paris Agreement commitments of 2030 and to decarbonization needed beyond then. At a minimum, it should be lowered to 370 tonnes/GWh, as in Alberta (see 1st link below - pages 9 - 11, Electricity generation), which represents the best natural gas technology available today, and then should gradually decline over time as a disincentive to new natural gas infrastructure.

2. Unfortunately, the scope of the EPS is much smaller than that of the former cap and trade system, covering around 20-30 megatonnes compared to about 170 megatonnes of total emissions (see 2nd link below - final paragraph, 'Is this a step forward, or a step back?'). This will require the federal fuel charge backstop to make up some of the shortfall. It seems that Ontario is, unfortunately, moving to a new combined program that will be weaker and less ambitious than the cap and trade program it replaced.