Re:    EBR Registry Number…

Re:    EBR Registry Number 013-1457 – Amendments to the Cap and Trade Program and  Reporting Regulations & Service Regulation & Administrative Penalties Regulation

I am writing to express the support of Industrial Gas Users Association (IGUA) for the proposed Amendments to the Cap and Trade Program.

IGUA represents the interests of large industrial gas users in Ontario and Québec on natural gas and energy issues. Our membership spans key sectors of Ontario’s economy including mining, steel, pulp and paper, biofuels, chemicals, refineries and manufacturing. IGUA’s members own and operate some of the largest industrial facilities in Ontario producing goods and materials that are shipped all over the world. In short, IGUA membership comprises energy-intensive and trade-exposed companies from a range of industry sectors that are major employers in their local, and often remote, communities.

IGUA supports Ontario action on climate change and recognizes that environmental protection and economic growth are complementary and should be pursued simultaneously. We recognize that maintaining a maximum increase of 1.5-2°C in atmospheric temperature rise involves substantially decreasing CO2 emissions. IGUA is also cognizant that in a low-carbon future where global temperature rise has been kept below 1.5 degrees and even the material intensity of the economy has been reduced by half, the world will still need traditional commodities (minerals, steel, chemicals, forest products as well as renewable bulk commodities: bio-fuels, hydrogen, synthetic and bio-based material), creating a global need for decarbonized heavy industry(*1) . Ontario would be well served to leverage its resources and heavy industry into a competitive advantage as the supplier of low-carbon (eventually carbon-free) commodities. This will require a policy framework that drives decarbonization of heavy industry in the long-term and protects energy-intensive and trade-exposed (EITE) industries against exogenous competition from jurisdictions without stringent carbon regulation in the short to medium term. Driving EITE industry out of Ontario will only export the emissions.

IGUA welcomes the proposed amendments in EBR Registry Number 013-1457 and the improvements they offer over the original cap and trade regulations.

Linking with Québec and California

IGUA supports linking the Ontario Cap & Trade program with California and Québec. Many energy-intensive and trade-exposed industries, including IGUA members, operate facilities in both Ontario and Québec and linking the programs enables them to purchase allowances at a joint auction for all their facilities and to enhance their purchasing strategies.

Distribution of Free Allowances for Industrial Users of Electricity from Regional Cogeneration

IGUA welcomes MOECC action to address one of the major unintended consequences of the language used in the original cap and trade regulations. Distribution of free allowances to those capped industries that purchase electricity from regional cogeneration plants will lift the artificial cost burden on these energy efficient facilities and mitigate the penalizing of industrial clusters.

IGUA members would prefer to take responsibility for meeting their own compliance obligations and reporting. The transfer of emissions and compliance responsibility facilitates a true representation of emissions by each capped participant.

These regulatory changes would allow for regional cogeneration to be given the same treatment as an onsite cogeneration system, thus creating fair and equal treatment for cogeneration.

2021 -2030 Caps under the Program

IGUA supports establishing emissions caps for the 2021–2030 time frame to reduce the uncertainty around carbon obligations and enable investment decisions. IGUA respectfully reminds MOECC that carbon leakage would mean climate policy failure and should be avoided. We encourage MOECC: To set caps in consultation with EITE that reflect energy intensity and overall trade exposure, and protect Ontario against industrial leakage. Profitability in a given year should not factor into setting the allocation quotas;

Maintain the free allocation quota for EITE up to 2030 and as long as necessary to protect Ontario’s trade-exposed industries against unfair exogenous competition.

Each industrial sector and large final emitter will table sector and facility specific issues with MOECC for consideration. IGUA can provide a lens on the key issues common to all energy-intensive and trade-exposed industry sectors that can serve Ontario to carve a successful path to decarbonization without losing its industrial base. IGUA appreciates the opportunity for ongoing constructive consultation and dialogue with MOECC on carbon policy framework and complimentary policy instruments that can drive innovation and reduce the carbon intensity of the Ontario economy. Please do not hesitate to contact me if you have any questions or require additional information.

Sincerely, Dr Shahrzad Rahbar, President, IGUA

(*1) Bataille et al., The Potential to Decarbonize Canadian Heavy Industry: Technological and Policy Pathways for Canadian Energy-Intensive Industry to Thrive in a Low-carbon World, 2016.

[Original Comment ID: 211285]