Discussion Paper: Regulating Commercial-Scale Geologic Carbon Storage Projects in Ontario

Capturing carbon dioxide (“CO₂” or “carbon”) and permanently storing it in deep geological formations could provide industries in Ontario with a critical tool for managing their emissions and contributing to the achievement of Ontario’s emissions reduction targets. Geologic carbon storage (further referred to as carbon storage) involves injecting captured CO₂ into deep geological formations for permanent storage.

Ontario is taking a measured and phased approach to enabling and regulating geologic carbon storage in Ontario.

In the first phase of Ontario’s Roadmap for enabling geologic carbon storage, and following consultation on a discussion paper posted in January 2022, changes were proposed through Bill 46, Less Red Tape, Stronger Ontario Act, 2023 to remove a prohibition on certain carbon storage activities from the Oil, Gas and Salt Resources Act. These changes received Royal Assent (approval) on March 22, 2023.

In the second phase, further amendments were made to the Oil, Gas and Salt Resources Act to enable ‘special projects’ to test, assess, pilot or demonstrate new technologies, methods or activities such as carbon storage and to enhance public safety. These changes received Royal Assent (approval) on June 8, 2023.

From September to October 2023, we consulted on implementing a regulation to allow proponents to seek approval for special projects, including carbon storage. Ontario Regulation 425/23 – Special Projects made under the Oil, Gas and Salt Resources Act took effect on January 1, 2024. While the framework for special projects applies equally to both public (Crown) and private lands, further legislative changes would be required before public land could be used for carbon storage projects.

In Phase 3, we are now working on the development of a proposed framework for full-scale commercial carbon storage projects.

Development of commercial-scale carbon storage projects in Ontario could help:

• Support emissions reduction and the production of low-carbon hydrogen.
• Support the transition to a low-carbon economy.
• Preserve high-value jobs, attract investment, and encourage innovation.
• Ontario businesses take advantage of federal incentives for carbon storage.

Different jurisdictions have taken different approaches in developing regulatory frameworks for commercial-scale carbon storage projects. Some jurisdictions, like Alberta and British Columbia incorporated requirements governing carbon storage activities into existing legislative frameworks. The province of Manitoba has recently introduced a new stand-alone bill that if proclaimed into force, would govern the storage of carbon dioxide in geological formations in that province. Regardless of the approach taken in Ontario, the development of a commercial-scale framework would most likely require amendments to number of existing statutes and regulations and the development of broad regulation-making authority sufficient to allow the province to add to and refine Ontario’s framework in the future.

We are seeking feedback on the design of a commercial-scale regulatory framework in Ontario. The discussion paper outlines various elements commonly addressed in the regulatory frameworks for carbon storage in other jurisdictions that we are considering in the design of Ontario’s proposed framework. At the end of the discussion paper, we have also included questions seeking feedback on how these components could be incorporated into the design of a commercial-scale carbon storage framework in Ontario.

Regulatory impact analysis

The environmental, social and economic consequences of this proposal are expected to be neutral to positive.

Carbon storage is new to Ontario and developing a comprehensive framework to regulate this activity would help ensure that it is done responsibly, with measures in place to safeguard people and the environment. Establishing a clear legislative and regulatory framework for these projects would be key to managing the risks associated with geologic carbon storage, including minimizing the potential for leaks to the surface or drinking water sources, induced seismicity (seismic events from human activity), or interactions with other resource activities.

The development of commercial-scale carbon storage projects in Ontario has the potential to preserve or create job opportunities, particularly in the construction, operation, and maintenance of facilities and related infrastructure.

If approved, proponents seeking approval to develop commercial-scale carbon storage activities would be required to provide financial assurance and pay fees and other charges established to cover costs associated with the framework’s delivery such as annual fees and fees for applications. Where projects would be using public land/resources in connection with carbon storage projects, they could also be subject to charges such as lease and/or rental payments. The framework could seek to adopt industry standards to eliminate redundant reporting requirements and facilitate harmonization of activities with other jurisdictions.

Administrative costs associated with a commercial-scale regulatory framework would depend on the framework’s final design and would be assessed during the framework’s development. We welcome feedback on the potential administrative costs associated with any of the concepts or framework components addressed within this discussion paper.