The Government is proposing…

The Government is proposing Excess Emissions Units and Emissions Performance Units as the only available compliance units. We fully support the use of Emissions Performance Units as this has been proven in other systems such as Alberta’s TIER program to be a successful incentive for GHG reduction. The Excess Emissions Unit, on the other hand, provides no assurance of GHG mitigation and acts simply as a revenue tool for the Ontario government and a means of price setting in the carbon market. We recognize the desire of the Government to generate revenue from the EPS, but it should not be at the expense of economic efficiency and opportunities for Ontario’s farmers, First Nations, communities and private sector to create value in the low carbon transition.

It is through the generation of offsets that reduce sources of emissions from non-regulated sectors and that sequester carbon from natural resources that Ontario can achieve the lowest cost of mitigation and create opportunities for these constituents in the new economy. We urge the Ontario Government to consider the use of GHG offsets as a compliance instrument in the Ontario EPS as a means letting markets find the most efficient solutions. Offsets have proven to be very successful in other markets such as Alberta where they have provided greater than a third of the mitigation and done so at both a low cost and a significant benefit to rural communities and to innovation in low carbon technologies for Alberta companies.

As an organization, we work with companies, farmers and communities across Ontario who have a significant ability to attract capital investment and diversify revenue streams by leveraging the GHG reductions and sequestration from their activities in sequestering CO2 through sustainable forest management, retrofitting refrigeration systems to remove high-GWP refrigerants, recovering greater organic waste to convert to energy, adopting regenerative agriculture practices, and more. They are keen to participate in the carbon market and are concerned that the Ontario government proposal will lock them out of this opportunity.

As it currently stands, these farmers, companies and communities will rely on the federal offset system to be able to monetize the reductions and sequestration they are able to deliver at low cost. However, the inability of Ontario EPS regulated facilities to use offsets will likely result in a federal offset market with little to no demand for offsets. As a result, the opportunities for these constituents in Ontario will not be viable. The lost opportunity for economic diversification and attracting capital is worse considering that their counterparts in Saskatchewan, Alberta, Quebec and other provinces will have this ability as their provincial systems recognize offsets.

The federal offset system represents an opportunity for Ontario communities, farmers and private sector to create value from GHG mitigation and sequestration that can not only help Ontario industry comply at lowest cost but could also be exported to higher emitting provinces. It is also a system that will be up and running in 2022 and requires no further development by Ontario. We urge the Ontario Government to include offsets approved in the federal offset system as an eligible compliance unit in the EPS as a means of unlocking this opportunity for Ontario.