Process for adding industrial activities to the Emissions Performance Standards (EPS) Program

The Emissions Performance Standards program recognizes the unique circumstances of Ontario’s economy and considers specific industry and facility conditions while allowing for economic growth.

The program holds polluters accountable for their greenhouse gas emissions through a system that is tough, but fair, cost-effective, and flexible to the needs of our province.

On January 1, 2022, Ontario fully implemented the Emissions Performance Standards program, replacing the more costly federal Output-Based Pricing System that was in place in Ontario from 2019 to 2021.

We are now clarifying the administrative process that a person must follow to request the addition of an industrial activity to the Emissions Performance Standards program. A document detailing this process is available in the supporting materials section of this notice. We are also providing in that document information about the data the ministry requires to assess these requests.

The ministry will consult and consider feedback before making any decision on the addition of an industrial activity to the EPS program. Addition of industrial activities would require regulatory amendments.

Process for adding industrial activities to the EPS program

We’ve clarified the administrative process, making it clearer and easier for a person to request the addition of an industrial activity to the EPS program.

Facilities in industries that are not listed in Schedule 2 of the EPS Regulation may request their industry [1] be assessed for addition to the EPS program based on competitiveness and carbon leakage risks (i.e., the risk of production leaving the province for other jurisdictions with less stringent climate policies) from carbon pollution pricing.

As part of clarifying the administrative process, we are providing information on Ontario’s approach for carbon leakage and competitiveness risk assessment that has been added subsequent to consultations (See the related ERO notice below). We created a document that describes the approach for assessment and are making it available in the supporting materials section of this notice.

If the assessment results in the industry being preliminarily classified as being at medium or high risk, we will consider whether to propose an amendment to the regulation.

Any proposal to amend the regulation will be preceded by consultation The ministry will consult by posting a proposal to add the industrial activity to Schedule 2 of the EPS regulation on the Environmental and Regulatory Registries.

We will consider the comments provided on any proposal prior to adding any activity to the EPS program.

[1]Note that industry assessments will be made at the lowest level possible in the hierarchy of industrial classification (e.g., the industry, or five-digit level of the North American Industry Classification System).

Additional information

Ontario’s Emissions Performance Standards program

The EPS program is a key government action making large industrial polluters accountable for their greenhouse gas (GHG) emissions. The program is intended to:

• encourage the industrial facilities to reduce GHG emissions
• minimize competitiveness impacts and carbon leakage (the risk of production leaving the province for other jurisdictions with less stringent climate policies)

Ontario’s EPS program came into full effect on January 1, 2022, replacing the federal output-based pricing system (OBPS) that was in place from 2019-2021.

Ontario’s GHG emissions reporting program

The GHG emissions reporting program is an integral part of the EPS program as it provides verified emissions, production and emissions limit data for all registrants in the EPS program. These are used to determine either a facility’s compliance obligation or the number of emissions performance units (EPUs) it is eligible to receive for emitting less than its emissions limit.

The federal program

The federal Greenhouse Gas Pollution Pricing Act(GGPPA) has two parts:

1. An Output Based Pricing System (OBPS) that regulates GHG emissions from large emitters in manufacturing, resource and electricity generation industries by imposing a charge for emissions exceeding a facility limit.
2. A fuel charge on transportation and heating fuels used by households and enterprises not covered by the OBPS.

Provinces and territories can create their own pricing programs for fuels and/or emissions from industry, but the federal government has indicated that any provincial or territorial program must meet a benchmark (i.e., minimum criteria) it has established. This benchmark is the basis for the federal government’s decision on whether to either impose or continue to impose the federal OBPS and the federal fuel charge on any province or territory.

Under the federal benchmark, the EPS program must only apply to industries that are assessed by the jurisdiction as being at risk of carbon leakage and competitiveness impacts from carbon pollution pricing.