Submission Overview The…

Submission Overview

The Canadian Propane Association (CPA) welcomes the opportunity to participate in the consultation on Ontario’s proposed Bill 4, An Act respecting the preparation of a climate change plan, providing for the wind down of the cap and trade program and repealing the Climate Change Mitigation and Low-carbon Economy Act, 2016.

The CPA is the national association for Canada’s propane industry. In Ontario, there are over 100 members including producers, wholesalers, transporters, equipment manufacturers, retailers, distributors and associated sectors in financial services.
The CPA works with governments and regulators on policy issues that affect the propane sector, such as providing affordable and low-emission efficient energy to consumers. The CPA provides key services such as an innovative platform for industry members to collaborate on best practices, providing industry training through the Propane Training Institute and emergency response for propane and flammable liquids thorough Emergency Response Assistance Canada.

Ontario CPA members appreciate the Ontario government’s rationale in cancelling the Cap and Trade carbon market. We also think it is critical that the government of Ontario demonstrates a real commitment towards creating a fair and a level playing field in terms of policy development, where the propane industry can be a full contributor in providing affordable energy, reducing emissions while maintaining and creating jobs in Ontario.

That said, the CPA represents propane industry members who invested heavily in developing costly new systems, establishing new processes and hiring new human capital to ensure compliance under the former carbon market. Several members have made long-term investments to purchase and secure emission allowance credits.

The repercussions of the cancellation of the Cap and Trade carbon market on some of the CPA members has been significant. As a result, we are seeking to better understand how and what will be proposed to restore and compensate our members as a result of the cancellation and would expect to formally participate in the development and design of the new measures moving forward.

Recommendations

• The full inclusion and participation of the propane industry in the development of the new Climate Change plan and environmental policies.
• Fair and adequate compensation of the propane industry in respect of the cap and trade instruments.
• Targets be based on actual CO2 emissions, based on current and Canadian data to support policy decision or programs.
• A predictable and with minimal administrative burden mechanism to set and monitor targets.
• To appoint the CPA to the advisory panel to provide a market-based perspective in policy development.

Canadian Propane

Canada’s propane industry includes an extensive supply chain, from extraction to end-use across the residential, transportation, agricultural, petrochemical, industrial and commercial sectors. The industry’s footprint extends all across Canada.
According to a 2018 report by the Conference Board of Canada, the propane sector’s contribution to the Canadian economy is expected to be an estimated $4.4 billion in GDP annually between 2017 and 2025, supporting:

- Close to 21,000 jobs annually across Canada
- Close to $1 billion per year in government revenues

Propane in Ontario

Propane is a readily available, affordable and low-emission energy source with infrastructure already in place. The expanded use of propane can reap immediate results in Ontario’s renewed effort to effectively improve air quality and reduce human exposure to heavy emissions and black carbon. Propane is a safe, affordable, versatile, multi-purpose fuel that is highly portable, clean burning and non-toxic.

Approximately 100,000 Ontario households and businesses rely on propane as their primary and affordable source of heating fuel. Not only that, propane is also used in commercial, transportation, industrial and agricultural applications all across the province. Almost half - about 45% - of propane used in Canada occurs right here in Ontario.

The propane industry provides direct employment for over 2,000 families (labour income worth $115 million in Ontario), many of whom live in rural communities. As well, providing goods and services to the propane industry supports the jobs of many more in those communities. The propane industry also provides over $128 million to the Ontario government in revenues every year.
Many of our Ontario CPA members operate family-run businesses in small towns and rural communities across Ontario. They form the very fabric of the communities in which they live. They volunteer their time, donate to local sports teams and most important create good paying local jobs.

Propane is abundant and available now, with over 140 large storage facilities and 817 small storage sites across the province. Propane has the largest network of alternative fueling stations in Ontario, with 100 locations and 1,800 in Canada.
 
Barriers to Propane in Policy and Program Development

In the past ten years, CPA Ontario members have submitted proposals that would have provided important contributions to the government’s environmental solutions. Instead, the industry was pushed aside and ignored by policymakers in favour of other ‘clean’ energy technologies that are presently still in early stages of development and will continue to take a considerable amount of time, resources and financing to fully implement.

Previous environmental policy initiatives, enacted by the former government, excluded the propane industry and overlooked CPA’s proposals, which fundamentally created an unfair and uneven playing field, by picking favoured energy sources as the ‘winners’ and consumers, denied real choice, as the ‘losers.’ Examples include:

• Removal of propane from existing commercial vehicle incentive programs, as an eligible fuel in 2017, despite successful inclusion since 2008;

• The administration of the Ontario Home Energy Incentive Program (OHECIP) for propane by natural gas utilities, resulting in a low uptake of the program by non-natural gas customers, a public policy challenge discouraging market-based competition and denying consumers access and choice;

• Regulatory burden on the propane industry and rep tape impediments that increased costs, reduced competitiveness and hindered market development.

From 2015 through to 2018, the CPA presented several submissions to the former government that included a series of climate change policy recommendations that focused on the advantages of propane. The policy options advanced by the CPA would have provided significant and immediate opportunities to improve consumer choice, help lower costs, reduce greenhouse gas emissions and stimulate economic development in Ontario. Examples included:

• Lower emissions in the transportation sector through incentivizing greater market uptake for auto-propane;
• Improve rural and remote communities’ access to low-emitting and cost-effective options to convert from heating oil and diesel to high-efficiency propane;
• Encourage the use of propane generation technology in hybrid systems across renewables and distributed generation.

The Propane Advantage

Propane is recognized for its low environmental impact as a cost-effective and globally-trusted non-toxic alternative energy option. A more holistic approach to Climate Change and environmental policy development that includes propane would result in immediate gains.

Recognized for its low emissions and environmental impact by Canada’s Alternative Fuels Act, propane is one of the cleanest and most versatile fuels in existence.

Studies have found that propane can emit up to:

• 26% fewer GHGs than gasoline in vehicles.
• 38% fewer GHGs than fuel oil in furnaces and half the carbon dioxide (CO2) emissions of a charcoal barbecue.

Propane’s end-use GHG emissions are significantly lower than gasoline, diesel, coal and heating oil. When upstream (lifecycle) emissions are considered, the case for propane becomes even stronger.

Air pollutants negatively affect people and ecosystems worldwide. Criteria air contaminants and air toxics contribute to air pollution problems such as ground-level ozone, haze and acid rain; and health problems such as allergies, asthma, skin and respiratory tract irritation, and cancer.

It is important to consider that propane:
• Emits 60% less carbon monoxide (CO) than gasoline.
• 98% less particulate matter than diesel and contains virtually no sulfur – a contributor to acid rain.
• Emits practically no soot, low Hydrogen and Oxides of Nitrogen, which are the basic precursors of ground-level ozone, or smog.
• Burning propane also produces lower levels of air toxics, such as benzene and acetaldehyde, than either gasoline or diesel.

In the unlikely event of a leak, propane becomes a vapour that does not contaminate the soil, air or aquifers, unlike liquid fuels. Propane dissipates quickly into the atmosphere – a small amount of air movement is enough to disperse the vapour.
This is especially important when operating in environmentally sensitive areas such as farms, nature reserves or by water.
Ontario’s current environmental policy refers to propane as a low carbon fuel which is defined as emitting:

“Less carbon pollution than conventional fossil fuels such as gasoline. Ontario aims to increase its availability and use. Examples of lower-carbon fuel include propane and liquefied gas, and gasoline that has been mixed with renewable fuel content such as ethanol.”

CPA Comments on Bill 4

The propane industry recognizes we all need to do our part to reduce greenhouse gas emissions and collectively face our environmental challenges. The CPA supports the proposal to cancel the Cap and Trade carbon market and the preparation of a new Climate Change plan. In presenting this submission, the CPA considers the following overarching principle as crucial to developing public policy:

“In all its policy, government must ensure a level playing field – with no exemptions, no exclusions, and all participants treated fairly and equally.”

The CPA supports the proposed legislation because Ontario’s environmental policy development needs a fresh reboot in a way that:

• Encourages consumer choice
• Will have a positive economic benefit, including in rural and remote areas
• Will place consumers first
• Achieves environmental initiatives such as Switch-off Oil and Auto-Propane while growing Ontario’s economy, as well as maintaining and creating well-paying Ontario jobs.

Section 3.1 Targets

The CPA understands the need for the Ontario government to determine targets for the reduction of greenhouse gas emissions. We are of the view that targets must be based on actual CO2 emissions and that current and Canadian data must be used to set targets or to support policy decision or programs.

Furthermore, if a levy is imposed, it has to be predictable and have minimal administrative burden.

Section 4 (1) (2) Climate Change Plan/ Advisory Panel

The CPA supports the Minister’s requirement, with the approval of the Lieutenant Governor in Council, to prepare a Climate Change plan.

For the purpose of supporting the Minister in preparing the plan, the CPA requests to be appointed to the advisory panel to provide a market-based perspective in policy development. The CPA has concrete proposals which should be considered as part of the Climate Change program development.

Sections 6, 7 and 8

Cap and Trade Instruments

CPA members invested in costly new systems, human capital and created new processes to ensure full compliance. Furthermore, several members have made long-term financial investments to secure emission allowances.

The CPA’s main priority is to fully understand, how and what will be done to fairly restore and compensate our members.
The CPA calls for fair and adequate compensation, calls for the establishment of a joint-government committee in respect of the compensation framework and requests the opportunity to participate on such a committee.

Propane Policy Solutions – An Overview

Auto Propane

Propane is viable and trusted alternative automotive fuel in Canada and worldwide. In Ontario, auto-propane was successfully included in the Ministry of Transportation Green Commercial Vehicle Program (GCVP) from 2008-2010.

A 2017 report by the McMaster Institute for Transportation and Logistics confirms that investments in propane technologies can leverage the low prices of propane fuel to generate significant returns on investment (ROI) over the commercial vehicle’s lifecycle, while making significant contributions to reducing harmful emissions and improve air quality.

The CPA proposes the government adopt our recommended policy solution for lowering emissions in the commercial vehicle transportation sector through developing a program that incentivizes market uptake for auto-propane.

Program Highlights:

• Create a Propane Commercial Vehicle Program (PCVP) targeting 50,000 gasoline and diesel vehicles
o Costs for conversions are between $7,500 to $13,500 per vehicle
• Offer clean fleet incentives for the purchase of Original Equipment Manufacturer (OEM) vehicles designed for propane
o Costs for OEM conversions are between $3,000 to $5,400 per conversion
• Incentivize approved conversion systems (such as those approved by US Environmental Protection Agency (EPA)/ California Air Resources Board (CARB) (tested and certified low-emission)

Environmental and Economic Benefits:

• A minimum of 20% average fuel savings and immediate reduction of operating costs;
• 5,135 million tonnes of CO2 GHG lifecycle reductions;
• 98% less air contaminants than diesel-fuel and 20% less nitrogen oxide at combustion.

Switch-Off Oil Residential Program

With over 200,000 Ontario households who still use heating oil as their primary source of energy for across rural and remote communities, the CPA proposes that the government adopt our recommended policy solution to remove barriers for residential consumers to significantly reduce GHG emissions and access cost-savings by incentivizing furnace conversions from heating oil to high efficiency propane furnaces.

Program Highlights:

• Target 200,000 homes using heating oil with no access to natural gas;
• Reduces barriers that limit rural participation in contributing to environmental solutions;
• Offer incentives and rebates for homeowners to switch to propane;
• Deliver a robust program through an independently administered and audited third party;
Economic and Environmental Benefits:
• An average annual heating cost savings of at least 45.6% or $1,385
• 3.1 tonnes of annual CO2 reduction per house (-38.2%)
• Strengthens resiliency and economic development for rural residents and businesses

Remote Communities

Many remote communities across Ontario are typically ‘off-grid’ and currently use diesel or fuel oil for energy. They are looking for ways to improve cost-savings, reduce emissions and protect human health from harmful pollutants. Propane offers a safe, reliable, cost-effective and cleaner alternative.

The CPA proposes that the government adopt our policy solutions to improve air quality and health outcomes in remote communities, through conversion from heating oil and diesel to propane generation.

Conclusion

This submission discusses the CPA’s recommendations on developing environmental policy in Ontario, as well as effective ways propane and the propane industry can help Ontario achieve its climate change goals.

To help achieve the goals set out by the proposed legislation the CPA recommends that the Ontario government should take the following actions:

• Remove barriers for residential consumers to significantly reduce GHG emissions and access cost-savings by incentivizing furnace conversions from heating oil to high efficiency propane furnaces.
• Lower emissions in the commercial vehicle transportation sector through developing a program that incentivizes market uptake for auto-propane.
• Full inclusion of the propane industry in the development of climate change plans and environmental policy.
• Fair and adequate compensation of members in respect of the cap and trade instruments.
• Establishment of a joint government - propane industry committee to review the compensation framework.
• Ensure legislation, regulations and programs are developed in a way that:
• Maintains a level playing field
• Encourages consumer choice
• Will have a positive economic benefit
• Will place consumers first
• Achieve environmental initiatives while growing Ontario’s economy, as well as maintaining and creating well-paying Ontario jobs.

About the Canadian Propane Association

With over 400 members, the Canadian Propane Association (CPA) is the national association for the Canadian propane industry, a growing, multi-billion-dollar industry that impacts the livelihood of tens of thousands of Canadians. The CPA is dedicated to promoting propane, a clean, available, affordable and versatile energy solution, through industry training, emergency response and advocacy activities.

The mission of the Association is to champion propane and the propane industry in Canada, and to facilitate best practices, safety and a favourable business environment, through advocacy, training and emergency response. The CPA's vision is for a safe and thriving propane industry that plays a vital role in Canada’s energy sector.

For questions, clarifications and further discussion on this submission and topic, please contact:

Hando Kang
Regional Director, Government Relations, Ontario
Canadian Propane Association
E: handokang@propane.ca
P: 416.881.1483