To: Ministry of the…

To: Ministry of the Environment, Conservation and Parks (MECP)

Re: Making polluters accountable: Industrial Emission Performance Standards

We are pleased to provide these comments on behalf of London Health Sciences Centre (LHSC), an Ontario acute care teaching health network comprised of seven buildings totaling 3.5 million square feet of building space. LHSC employs nearly 15,000 physicians, residents, and staff and provides care to approximately one million patients per year. With an annual energy bill of $16 million, LHSC relies on its state of the art cogeneration based power plant to support self-sustainability and cost efficiency. Carbon pricing mechanisms in the province are of great significance to LHSC and we appreciate this opportunity to provide comments regarding the proposal details of the Emission Performance Standards (EPS) posted on February 12, 2019.

Section 2.0 - Program Scope
Under the federal Output Based Pricing System (OBPS), hospitals are not given the option to participate and will be subject to the fuel levy charges via Part 1 of the program. The hospital funding, received from the province in accordance with budget policies established by the Ontario Ministry of Health and Long-Term Care (MOHLTC), the South West Local Health Integration Network (SW-LHIN) and Cancer Care Ontario (CCO), contains no provisions for carbon pricing or greenhouse gas (GHG) emission reduction initiatives. London Health Sciences Centre would be expected to invest in GHG emission reduction while incurring an additional annual cost burden of $2.5 million by 2022.

The provincial government’s Made-in-Ontario Environmental Plan would allow hospitals to voluntarily opt-in to the EPS alternative and invest in GHG emission reduction strategies without the financial impediment of the OBPS. Until the EPS is accepted, institutions like LHSC that generate their own electricity are applying to opt-in to the OBPS to receive some cost relief from the federal program. It is the hope of these institutions that they will have the option to transition out of the OBPS and into the EPS for January 2020 should the provincial program be accepted. LHSC would request that participation in the OBPS not imply mandatory subsequent participation in the EPS and that opt-in to the EPS remains a choice for institutions under the emission threshold.

Section 2.3 – Emissions Threshold
Because of the cogeneration based power plant mentioned above, LHSC is one of a few hospitals in the province that would be required to report over a threshold of 25,000 tonnes CO2 out of approximately 150. It is likely hospitals will choose to opt-in to the EPS in the face of the OBPS carbon levy however mandatory participation of hospitals may not be advocated if the fuel levy was at some point removed. LHSC would propose that a 50,000 tonnes CO2 threshold be instated for institutions (if not for all industry) with the proposed voluntary opt-in limits to provide equal opportunity and flexibility to all in this sector.

Section 3.1.3 - Alternatives to Sector Based Performance Standards
In regard to performance standards for institutions we would suggest that there is not a measure of production that is common to all facilities in this sector, should this include hospitals, schools, and universities. Even amongst hospitals, historical benchmarking initiatives have proven that no two facilities are alike. Energy intensity will vary based on the type of facility and services it provides. For this reason, LHSC would propose that the Historical Facility Average Emission Limit standard would be best suited for hospitals. In cases where significant growth is expected, LHSC would also support a process whereby a regulated facility could apply to switch to a Facility Specific Emission Intensity should a suitable product be established.

Section 4.0 – Compliance Flexibility
LHSC supports the use of different compliance units as a lower cost compliance option for facilities regulated in the EPS. Facilities should have the ability to trade or bank these units indefinitely, which could be used for a compliance entity’s future compliance obligations. The EPS program should ensure availability and access to lower costs compliance units.

Section 8.0 – Harmonized Reporting and Verification Requirements
With respect to the reporting and verification requirements under the EPS, LHSC supports the harmonization with the federal reporting set out under the federal production Order and the Federal OBPS methods, threshold and verification. The streamlining of the reporting and verification requirements will reduce additional costs and administrative burdens for regulated entities.

Section 8.0 – Separation of Stringency Factors based on Emissions
LHSC supports different stringency factors applying to fixed process and non-fixed process emissions and the recognition that reductions from fixed process emissions are not feasible without impacting production.

Additional Comments – GHG Funding and Optimizing Emission Reductions
The Low Carbon Economy Fund (LCEF) and other federally proposed carbon tax reinvestment programs have pledged to provide up to 50% of project costs to approved GHG reduction projects for institutions such as London Health Sciences Centre. In contrast, the previous Ontario Cap-and-Trade program re-invested money in hospitals through a program called the Hospital Energy Efficiency Program (HEEP), which pledged 100% of project funding towards approved energy efficiency improvement projects.

London Health Sciences Centre, like many other healthcare institutions, is under great financial strain and thus capital expenditure must be critical to the provision and quality of patient care. Hospitals also do not have the opportunity to “set aside” extra capital to subsidize incentive programs such as the LCEF, which requires the organization to provide the remaining 50% of project costs. Funding cannot be accepted if the capital is not available. The HEEP funding addressed both of these issues by providing 100% of the funding and allowing energy-related projects from the Facility Condition Assessment Program (FCAP) to qualify so that aging infrastructure and inefficiencies could be addressed while targeting GHG emissions.

The Progressive Conservative Party of Ontario has put great emphasis on smart, cost-effective utilization of tax dollars. LHSC would support funding programs that are not contingent on removal of capital expenditure from hospitals’ primary activity and that would aid the facility in reducing energy consumption and GHG emissions through energy-related infrastructure renewal projects as the HEEP program did.

London Health Sciences Centre appreciates the chance to submit these comments for consideration and looks forward to further communication from the Ministry of the Environment, Conservation and Parks.