Proposed amendments to regulations under the Environmental Protection Act and the Environmental Assessment Act for combined heat and power systems that use natural gas or wood biomass as fuel

Technologies such as natural gas combustion turbines, used for power, or wood-fired combustors, used for heat in connection with a building's comfort heating system for comfort heating, may be coupled with a secondary device to create a combined heat and power (CHP) system.

CHP systems are an energy efficient technology that: generates power and captures the excess heat to provide space heating or steam. Compared to conventional and heat production, CHP systems offer benefits, including:

• better efficiency by utilizing the heat that would otherwise be wasted
• better reliability and resiliency to combat the possible impacts from weather-related emergencies
• use of wood biomass as fuel can help reduce fossil fuel consumption in parts of rural or Northern Ontario where access to natural gas is limited

CHP systems can be used in a variety of facilities, including:

• residential or municipal buildings (e.g., condominiums or community centres)
• institutional or commercial buildings (e.g., hospitals or hotels)
• manufacturing operations (e.g., food processing)

Currently, permissions for these combustion turbines and wood-fired combustors are often subject to different regulatory requirements even though the level of risk to the environment and human health are similar to comparable technologies. This creates an unlevel playing field for clients seeking to install these systems. The proposed regulation amendments would ensure these systems that are fueled by natural gas or wood biomass and have similar environmental and human health impacts are subject to similar or the same regulatory requirements. The proposal introduces a more uniform risk-based approach that aligns approval requirements with the level of risk and ensures human health and the environment are protected.

Proposed amendments to regulations made under the Environmental Protection Act

1. Exemptions for Low-Risk Micro-System

We are proposing to amend Ontario Regulation (O. Reg.) 524/98 - Environmental Compliance Approvals (ECA) - Exemptions from Section 9 of the Act (O. Reg. 524/98) that would be made under the Environmental Protection Act (EPA) to include new exemptions to ECA requirements for micro-systems in relation to air emissions.

• Natural Gas: CHP or power only systems under 500 kW and certified by the California Air Resources Board; meets applicable noise requirements (i.e., requirements to have the equipment indoors or meet equipment-based noise limits): and uses natural gas only

• Wood Biomass: CHP or wood-fired combustors between 50 kW and up to 150 kW; wood fuel meets specified Canadian Standards Association requirements; and the equipment meets specified European Committee for Standardization requirements

Qualified low-impact and less complex micro-systems that meet criteria would be exempt for section 9 of the EPA and would therefore not require an ECA or a Renewable Energy Approval (REA). The ministry can still inspect facilities and ensure compliance with legal requirements.

See attached proposed amendments to O. Reg. 524/98 (ECA - Exemptions from Section 9 of the Act) for further details.

2. Air Emissions Environmental Activity and Sector Registry (EASR) Registration for Lower-Risk Small Systems

We are proposing to amend O. Reg. 1/17 (Registrations under Part II.2 of the Act - Activities Requiring Assessment of Air Emissions) to require small systems that meet the specified criteria to register in the online EASR, instead of obtaining an ECA:

• Natural Gas: CHP or power only systems under 25 megawatts (MW) that do not qualify for an exemption from section 9 of the EPA, and that use natural gas. Operators of combustion turbines must meet specified operating requirements in O. Reg. 1/17, including in relation to any noise and air emissions from the system.

• Wood Biomass: CHP systems under 3 MW that do not qualify for an exemption from section 9 of the EPA European certified; and use certain types of wood that meet CSA-ISO requirements. Operators of such CHP systems must meet specified operating requirements in O. Reg. 1/17, including in relation to any noise and air emissions from the system.

CHP systems would be required to complete assessments (e.g., air, noise) approved by a licensed engineering practitioner to ensure that their facilities meet operating requirements. Once registered, facilities can operate immediately if criteria are met. The ministry can still inspect facilities and ensure compliance with legal requirements (e.g., require CHP systems to validate air emissions by conducting source testing) and efficiency by conducting thermal efficiency testing).

See attached proposed amendments for O. Reg. 1/17 (Registrations under Part II.2 of the Act - Activities Requiring Assessment of Air Emissions) for further details.

Also, the Environmental Activity and Sector Registry - Limits and Other Requirements (EASR Publication) is a supporting document, incorporated by reference in O. Reg. 1/17, that facilities must comply with if they are required to register under the Air Emissions EASR regulation.

To support this new EASR category, we are proposing updates to the EASR publication including new air emission limits for NO_x (based on Guideline A-5 - Atmospheric Emissions from Stationary Combustion Turbines) and operating requirements for small CHP systems, including power-only systems that use natural gas combustion turbines. Existing requirements in the EASR publication would apply to small WFC regardless if they are heat only or CHP​​​​​​​ systems. Emission limits for these systems would be added to Chapter 1 of the EASR Publication and new chapter, Chapter 6, is proposed to reflect new operating requirements for natural gas combustion turbines.

See attached proposed amendments to the EASR​​​​​​​ publication for further details. For proposed updates to Guideline A-5, please go to Guideline A-5 posting. A link to the posting can be found in the 'Related links" section below.

Systems that do not qualify for an exemption or EASR​​​​​​​ registration would be required to obtain an ECA.

Also, we are proposing that facilities currently holding ECA​​​​​​​s for CHP​​​​​​​ systems would continue to operate under the conditions of those ECA​​​​​​​s until the ECA​​​​​​​ expires on January 31, 2027. Once the ECA​​​​​​​ expires, a revised approval under the current framework at that time would be required.

3. Proposed amendments to regulations related to REAs made under the EPA, and to regulations made under the Environmental Assessment Act (EAA) for wood biomass

We are proposing to amend O. Reg.​​​​​​​ 359/09 (Renewable Energy Approvals Under Part V.0.1. of the Act) so that CHP​​​​​​​ systems that use specified wood fuels would no longer be required to obtain a REA and instead would (i) be exempt form the requirement to obtain an ECA​​​​​​​; (ii) be required to register in the online EASR​​​​​​​; or (iii) be required to obtain an ECA​​​​​​​.

Also, we are proposing to amend O. Reg.​​​​​​​ 116/01 (Electricity Projects) and O. Reg.​​​​​​​ 101/07 (Waste Management Projects) made under the EAA, which will streamline environmental assessment requirements for large, high efficiency wood biomass CHP​​​​​​​ systems. Currently, environmental assessment requirements are integrated into the REA approval. Proposed amendments would introduce streamlined environmental assessment requirements under O. Reg. 116/01 and O. Reg. 101/07 depending on the primary purpose of the project, size and the amount of biomass used at the site.  

Also, we are proposing that facilities currently holding REAs would continue to operate under the conditions of these REAs until the REA expires. Once the REA expires, a revised approval under the current framework at that time would be required.

See attached proposed amendments to O. Reg.​​​​​​​ 359/09 (REA Approvals Under Part V.0.1. of the Act) that would be made under the EPA; and O. Reg. 116/01 (Electricity Projects) and O. Reg.​​​​​​​ 101/07 (Waste Management Projects) that would be made under the EAA.

4. Summary of Proposed Permissions Framework

The proposed permissions framework for these CHP​​​​​​​ systems is summarized in Table 1 (natural gas turbines) and Table 2 (wood biomass combustors/facilities) below.

We encourage interested parties to make comments on the proposal including the attached documents, which provide greater detail on the proposed regulatory amendment. We will consider all comments submitted to this posting prior to finalizing the regulations.

Table 1: Natural Gas Turbine CHP​​​​​​​ System Permissions Proposal

Table 2: Wood Biomass CHP​​​​​​​ System Permissions Proposal

Regulatory impact statement

In addition to the objectives and benefits of the proposal mentioned above, the proposed regulatory amendments are expect to, if approved, save time and costs for proponents choosing to install such systems. While results may vary depending on the proponent, planning and design of CHP​​​​​​​ systems, it is estimated that proponents could potentially benefit from:

• a potential one-time application fee savings of up to approximately $20,000 for a natural gas combustion turbine CHP​​​​​​​
• a potential savings of approximately up to $250,000 or more for a wood biomass fuel CHP​​​​​​​ project depending on the project's complexity and whether an exemption, EASR​​​​​​​ or an ECA​​​​​​​ is required

Also, streamlining permissions for systems could create additional economic opportunities for Ontario's CHP​​​​​​​ manufacturers and technical experts.

For CHP​​​​​​​ systems that use wood biomass, this initiative could also enhance the Ontario-based market for wood biomass leading to jobs, investment and manufacturing opportunities in Ontario's forestry sector. For example, pulp and paper mills could gain new customers for wood pellets leading to jobs and economic development.

These benefits may be achieved in addition to mitigating impacts to that environment if the systems are operated in accordance with regulatory requirements. The regulatory requirements in the proposal are intended to mitigate air, noise and odour impacts from all sources of contaminants from CHP​​​​​​​ systems described above.