October 10, 2022 ERO number…

October 10, 2022

ERO number 019-5769

*Submitted via Environmental Registry of Ontario*

RE: Greenhouse Gas Emissions Performance Standards (EPS) Program Proposed Regulatory Amendments 2023-2030 period.

Greenfield Global Inc. (“Greenfield”; www.greenfield.com) is one of the world’s largest privately held ethanol and specialty chemical companies. Founded in 1989, Greenfield is a leading producer of the full spectrum of ethanol grades, high-purity solvents and bioprocessing materials for beverage, medical, and industrial applications, as well as fuel ethanol and other biofuels for transportation and the clean energy sector. In addition to being Canada’s leading producer of fuel-grade ethanol, Greenfield has significant production, blending and packaging operations in the United States and Ireland.

Greenfield has over 30 years of expertise in high-purity alcohol and renewable fuel production. Greenfield operates three distilleries in Ontario, one in Quebec and one in Minnesota and generates significant quantities of biogenic CO2 from the fermentation of corn. We are also a significant consumer of natural gas used to generate steam for ethanol distillation and fuel our distillers’ grain drying systems.

Sustainability is at the core of everything we do. Greenfield is developing a highly ambitious net zero emissions plan for all our operations and is excited about decarbonizing our manufacturing processes and lowering the carbon intensity of our renewable fuel production.

Executive Summary

Greenfield supports Ontario’s Emissions Performance Standards program to meet the benchmark set by the federal government. And as a global company proudly headquartered in Ontario, Greenfield endorses the government’s efforts to ensure that the EPS program will continue to be a fair, cost-effective program that reduces emissions while supporting green economic growth in the province. Greenfield also submits that pertinent to the Ontario EPS, the proper recognition of offset credits and biogenic CO2 sequestration will be essential to meet the climate goals of Ontario.

MECP's proposal excludes offset credits as a future compliance option. However, Greenfield supports the recommendation submitted by the Industrial Gas Users Association (IGUA), of which Greenfield is a member, to include offset credits as an alternative compliance option. This can be achieved by developing an Ontario provincial offset system or leveraging existing offset systems and credits across Canada.

Greenfield also asks MECP to continually evaluate and report carbon leakage risks in its Public Reporting, which is especially important for industries competing in global markets for market share and investment funding. In contrast to Canada's carbon pricing, many US states offer generous and varied investment incentives and tax credits intended to direct the flow of private sector investments. The cross-border trade exposure and global competition for Ontario's domestic ethanol producers should be recognized. Specially:

- MECP should reassess the risk of carbon leakage for Ontario ethanol plants using industry-specific data;
- Proceeds generated from the Ontario program should be returned to regulated emitters is also to maintain the program's innovation as the stringency increases; and
- Credits for biogenic CO2 should be included to fund the capital and operating costs needed to capture and sequester biogenic CO2. After all, the objective of any government emissions program should be to drive meaningful and sustainable reductions in carbon, regardless of its source.

Recommendations

Against this backdrop, Greenfield is pleased to submit comments regarding the proposed changes to the Emissions Performance Standards program for 2023-2030.

Carbon Price

Greenfield supports Ontario’s proposal to align the EPS program with the minimum carbon price set out in the updated federal benchmark.

Cogeneration Performance Standard

Greenfield has concerns regarding combining the Cogeneration Sector Performance Standard (Method D) with the Thermal Energy Sector Performance Standard (Method C) and that, after 2022, no single standard that applies to both electricity and thermal energy from a cogeneration system.

Program Scope - Addresses Industry Interest

Greenfield does not have comments or changes to the proposal to add sectors represented by the following North American Industrial Classification System (NAICS) codes to the list of covered industrial activities. However, we maintain that Canada’s domestic ethanol plants are trade exposed and at risk of carbon leakage and competitiveness impacts from carbon pollution pricing.

As well, Greenfield strongly encourages the province to reconsider its exclusion of Ontario ethanol plants, a determination that in the past was based on aggregate data from Statistics Canada as opposed to industry-specific data. This is especially critical given the US Inflation Reduction Act (IRA) passage in September. The US does not have a national carbon price. At the same time, the IRA will establish a new production tax credit for clean fuels depending on the GHG intensity of the fuel. The rate for most clean fuels would begin at $0.20 per gallon (adjusted by the GHG intensity), but would begin at $1 per gallon if the fuel producer meets prevailing wage and apprenticeship requirements.

Registration and Cessation of Coverage – Supports Program Administration and Enforcement

Greenfield agrees that facilities expected to emit 10,000 tCO2e or more/year within three years following a major retrofit or expansion to register in the EPS program as soon as production has started to increase.

Other Administrative and Technical Changes - Carbon Capture Utilization and Storage (CCUS) – Responsive to Regulated Industry

The Ontario EPS should incent bioenergy CCS (BECCS) and offer a more substantial tax credit when CCS is used to store biogenic carbon (rather than from other forms of industrial emissions) in recognition of the unique benefits BECCS offers.

Carbon capture and sequestration for the ethanol industry will be a viable pathway to net zero or even net negative zero ethanol production. It is worth noting that sequestration would allow Greenfield to produce a liquid transportation fuel with lower carbon emissions than wind or solar electricity.

Ethanol plants capture CO2 from fermentation, called biogenic CO2 and once captured; sequester it. The corn plant captures CO2 from the atmosphere through photosynthesis, and the corn kernel's carbon is captured at the distillery. It is one of the lowest-cost ways of capturing CO2 from the atmosphere. In addition to biogenic CO2 capture, Greenfield would investigate the economics of capturing CO2 from Greenfield's natural gas-fired boilers and sequestering it along with our biogenic CO2. Greenfield is also working with corn suppliers and Ontario farmers to incentivize soil carbon capture practices to help get to net zero ethanol.

Ontario ethanol plants need access to safe and stable CO2 sequestration to remain competitive with our US ethanol counterparts. The US IRA provides a significant subsidy for CO2 capture and sequestration. While there is some financial support for sequestration via the federal Output-Based Pricing System (OBPS), the Ontario EPS program should provide emission credits for CO2 sequestration to level the playing field with competition.

Question for Discussion

Are there any other sectors that should be considered for a sector-wide performance standard (e.g., lime production, automobile manufacturing, ethanol production, gold mining and milling)?

Greenfield strongly favours industry-specific performance standards. While it is possible to develop sector-wide performance standards, this approach does less to optimize GHG emissions reductions, minimize carbon leakage, and attract investment.

Conclusion

Greenfield thanks MECP for the opportunity to provide feedback, especially in regard to program scope, carbon capture and sequestration (biogenic carbon), and carbon leakage and related competitiveness assessment. Greenfield also encourages MECP to ensure that the EPS program continues to consider interaction with other regulations, like the federal Clean Fuel Regulations and to assess impacts (direct or indirect) as the federal CFR market continues to mature.

Ontario will need many initiatives to lower its greenhouse gases and we hope these comments are constructive. Please do not hesitate to contact me if you have any questions.

Andrea Kent
VP Government and Industry Relations
Greenfield Global
www.greenfield.com
andrea.kent@greenfield.com
613-698-0116