November 16, 2017…

November 16, 2017

Shelley Hyatt
Senior Policy Advisor
Ministry of the Environment and Climate Change
Climate Change and Environmental Policy Division
Air Policy Instruments and Programs Design Branch
77 Wellesley Street West, Floor 10 Ferguson Block
Toronto Ontario M7A 2T5

Dear Ms Hyatt:

Re: EBR Registry Number 013-1460 Regulation Proposal Notice: Ontario Offset Credits regulation under the Climate Change Mitigation and Low-carbon Economy Act, 2016

The following comments are in response to the Minister’s invitation for further dialogue on Ontario’s Environmental Bill of Rights Registry No. 013-1460, Regulation Proposal Notice: Ontario Offset Credits regulation under the Climate Change Mitigation and Low-carbon Economy Act, 2016. As an early adopter of best management practices in environmental waste diversion and responsible waste management strategies, the City of Guelph was one of the leaders in investing in composting and methane gas recovery and destruction initiatives at its closed landfill. These huge investments were not mandated by the Province and were implemented solely by of the City taking an environmental responsible lead.

GENERAL COMMENTS

The City of Guelph would like to raise a concern over the eligibility start date of January 1, 2007, for initiatives under the Draft Regulation, in particular S. 5.(1) 3. The City of Guelph voluntarily installed a Landfill Gas (LFG) capture and control systems and currently participates in the registration, verification and sale of Greenhouse Gas (GHG) offsets from this system in the voluntary carbon market. The City is concerned however, that the proposed start date within the Draft Offset Regulation will preclude us from migrating from sale of offsets within the voluntary carbon market to the regulatory market. There is precedence from other jurisdictions (e.g. California) where projects included in voluntary registries prior to the implementation of regulatory registries were given the opportunity to transfer (CAR 578). The City believes that such an option would allow early adopters of GHG reduction programs to continue to benefit from their proactive approach to mitigation.

In addition, the proposed start date within the Draft Offset Regulation may also pose challenges with continued participation in the voluntary carbon market. It is presumed that verification of offsets will now be required to be completed in accordance with the Ontario protocol, and although this protocol does not specify a project start date, it does point back to the start date within the regulation. The City’s concern is that once provincial regulations are enacted, they will become the default standard against which voluntary offsets will be compared. In addition, purchasing companies may request that the City comply with the provincial regulations. The proposed start date in the Draft Offset Regulation may therefore preclude the City from being able to sell their voluntary credits on the market.

Overall, based on our project and others we are aware of within the industry, the start date poses a significant challenge to generation of LFG capture and control offsets in Ontario and also may compromise the viability of activity within the voluntary market for these offsets.

Further, as one of the few municipalities that currently participate in offset generation, verification and sale within the voluntary market, S. 4.2.2 of the Draft Landfill Initiative Protocol does not clearly define eligibility. Our landfill opened in 1962 and LFG capture and control was installed in September of 2005. The total capacity of our closed landfill was 3.5 million cubic metres. Section 4.2.2 of the Protocol does not define whether a landfill such as ours will be eligible for offset generation. The current wording suggests that our LFG capture and control projects would not be eligible for offset generation, which is concerning as our project is one of the few that is currently active in offset generation and verification.

Section 4.2.2 (a) 1.of the draft Offset Initiative Protocols for Ontario’s Cap and Trade Program currently stipulates that “If the site opened or expanded between August 1998 and 2005 (inclusive), the site shall have had a maximum capacity of less than 3 million cubic meters of waste”. This requirement would also prevent the City of Guelph’s closed landfill site from participating in the Cap and Trade program if the interpretation of this section means the site was opened during the defined time period. On the other hand, this section can be interpreted as meaning the landfill had to have been opened during that time frame for the requirement to have a maximum capacity of less than 3 million cubic meters of waste.

The City does not understand the reasoning behind the aforementioned draft regulations that would prohibit the closed landfill from benefiting from the Cap and Trade program.

The potential financial loss of the Cap and Trade draft proposal, as written, for the City of Guelph, is estimated to be $500,000 per year in the voluntary market and $1.5 million per year in the Cap and Trade market.

CONCLUSION

The City asks that these comments and recommendations be taken into consideration in finalizing the Ontario Offset Credits regulation under the Climate Change Mitigation and Low-carbon Economy Act, 2016. Fundamentally, the City is concerned that by voluntarily implementing their current capture system 18 months prior to the proposed regulatory start date they are precluded from receiving the substantial benefits similar facilities who were not as proactive will receive.

[Original Comment ID: 211334]