Overall thoughts • An EPS as…

Overall thoughts
• An EPS as a method to control greenhouse gases is a good first step, but it doesn’t not take into account the remaining 70% of provincial emissions. Furthermore, IF the province did meet the 2020 target of 15% reduction vs 1990 this would mean in order to achieve the 2030 target of 37% (a difference of 22% over 10 years) Ontario’s entire industry sector would have to reduce emissions to near net-zero levels in 10 years. This is not possible by having an EPS on one sector. To help combat this transportation needs to be included, as it is the highest emitting sector in Ontario, with significant increases of 34% since 1990 (https://docs.assets.eco.on.ca/reports/climate-change/2018/Climate-Actio…).
• Dedicated funding for not only projects but investment in green tech go hand in hand. Not only will green tech investment create jobs it will work to reduce emissions further by being able to implement newly researched energy efficiency improvements.

Q1. How can the EPS be designed to optimize GHG emission reductions while minimizing carbon leakage?
• By the government facilitating a steady transition while providing financial support and industry partners to help with new tech implementation and training.
• By ramping up costs for pollution over time.
• By starting small and learning from mistakes the scope of emissions covered expands.

Q2. What compliance options should industrial facilities have under the program (e.g. use of compliance units for payments for excess emissions that go into a fund that could be used to support greenhouse gas emissions projects in industry, voluntary emission reductions or removals or overachieving the EPS, other)?
• Compliance Units – Payments (top choice)
o I agree with the increase of per tonne per year above the performance standard, and those costs being returned back to the industry for improvements. My concern surrounds if these payments will be the only type of financial support given to industry. Initial and ongoing investment from the province needs to be created in addition to overages, as the latter will be unstable year to year.
• Compliance units for Emissions Below a Facilities AEL
o This sounds similar to a cap and trade allowance situation but without the direct financial benefit. It seems more less stringent than the payment mechanism.
• Compliance units for voluntary carbon emissions reeductiosn or removals
o How will offsets be monitored and ensured they are real reductions? At what point can industry use offsets? They are controversial for a reason as they can be seen as a “cop out” with little oversight, regulation, and enforcement. Conversely, investment by the government or private entities could generate additional jobs by investing in legitimate, Ontario produced offsets.
o What is the value for emitters to pursue this?

Q3. If facilities receive compliance units for GHG emission reductions beyond the standard for the facility, should they be eligible to trade or bank them indefinitely?
• No this, could in the long, term cause an oversupply and unlimited “banking” of units that may lead to unanticipated consequences.

Q4. Which industrial facilities should be covered by the program (e.g. industrial facilities with GHG emissions greater than 10,000 or 25,000 or 50,000 tonnes CO2e per year)?
10,000 tonnes of CO2e/yr or more to ensure increased breadth of coverage of the industrial sector. This would also ensure “smaller” emitters at the approximate 10,000 tonnes mark would have the opportunity to implemented emissions reduction technology. It may be worth having a tiered pricing system for high polluters to provide additional incentive to reduce emissions to certain levels, instead of a blanket $20-50/tonne; though this adds a layer of complexity.

Q5. Should Ontario harmonize with the federal reporting under the federal Production Order (which sets out reporting and verification requirements) and the federal OBPS (output based pricing system) (e.g., methods, threshold, verification)?
Ideally, yes, but only if it makes sense. There should be an effort to ensure that there is alignment between the information needed by the province and feds and that the information will be useful to both parties and participants.

Q6. Should different stringency factors apply to fixed process and non-fixed process emissions?
Before a blanket yes/no answer is given it needs to be understood 1. If there are tech options that reduce emissions from fixed emissions within identified regulated sectors and 2. How will implementation of those tech/process improvements be funded? There may be some fixed emission processes with opportunities to reduce emissions, where in other areas that tech may not exist. This may not be a yes or no question.

Final comments:
• On the sentence “Carbon leakage occurs when production moves from a jurisdiction with stringent climate policies to a jurisdiction with no or lower cost climate policies”. For clarification, leakage occurs when there is no transitional support for high emitting industries and polluters, not because of strict climate policies. The government needs to support a transition to a low carbon economy by having a plan in place to adopt new technology and industry changes at a steady pace, not by implementing a system with no financial and technology related support all at once.
• On Emissions Intensity – needs to be coupled with an overall absolute reduction goal for the sector, even if it is just mirroring overall provincial goals. On a per unit scale emissions may reduce over time due to new technology, process changes etc. but increases in production could lead to overall no change in total emissions reductions.