Changes to the Emissions Performance Standards program

Ontario industries are facing substantial challenges from global economic uncertainty. To reduce costs, protect jobs and help businesses remain competitive so that they can continue to invest and expand in Ontario, the government is proposing changes to the EPS and GHG Reporting programs.

These changes would: 

• align the price of Excess Emissions Units (EEUs) in the EPS regulation with the updated federal benchmark carbon price
• implement administrative and technical program improvements

See below for more details.

The proposed changes would be amendments to: 

• Ontario Regulation 241/19: Greenhouse Gas Emissions Performance Standards regulation (O. Reg. 241/19 or EPS Regulation)
• GHG Emissions Performance Standards and Methodology for the Determination of the Total Annual Emissions Limit (the EPS Methodology)
• Guideline for Quantification, Reporting and Verification of Greenhouse Gas Emissions (the Reporting Guideline)

Changes to the EPS Methodology and Guideline are mostly needed to implement the changes being proposed to the EPS Regulation. Some additional changes to address some administrative and technical improvements are also being proposed

Proposed Timing

The changes are proposed to take effect as early as January 2027.

Regulatory impact analysis

If the proposal is implemented, the present value of the total benefits from lower compliance costs for EPS facilities is expected to be $0.8 billion during 2027-2031. This reflects compliance years 2026 to 2030. 

If the proposed changes are implemented, GHG emissions for Ontario are expected to increase by approximately 0.9 million tonnes in 2030 compared to the current program design.

Other information

Ontario’s Emissions Performance Standards Program

The Emissions Performance Standards (EPS) program is Ontario’s carbon pricing program for large facilities in the manufacturing, resource and electricity generation sectors. 

It came into full effect on January 1, 2022, and is intended to:

• Regulate GHG emissions through the use of financial instruments
• Minimize competitiveness impacts and the risk of carbon leakage.

Ontario’s GHG Reporting Program

Certain businesses and industrial facilities, including those in the EPS program, are required to report their annual GHG emissions under Ontario’s GHG reporting program.

The GHG Reporting program provides verified emissions, production and emissions limit data for facilities in the EPS program. These amounts are used by EPS facilities to determine whether they have a compliance obligation for emitting more than their emissions limit or can receive emissions performance units (EPUs) for emitting less than their emissions limit.

Details of the proposed changes

1) Align the price of EEUs with the updated federal benchmark carbon price

Context

On May 19, 2026, the federal government published an update to the minimum national carbon price in the federal benchmark (i.e., carbon pricing criteria that Ontario’s EPS program would be required to meet).

Ontario’s EPS carbon price (i.e., price for purchase of EEUs) is currently more stringent than the updated federal price.

The federal government also noted that a full, updated federal benchmark will be published later in 2026.

Proposed Change

• Update the price of EEUs in the EPS regulation as set out in Table 1 below to align with the new federal benchmark carbon price trajectory.

Rationale

• Would help reduce compliance costs and provide EPS facilities with the same carbon price trajectory available to all other Canadian jurisdictions.

Table 1: Cost of EEUs

2) Implement program improvements

Context

After the first four compliance periods, we have identified opportunities to make administrative and technical improvements.

Proposed changes

• Adding to the list of circumstances where the Director would be able to amend or revoke a facility’s baseline emissions intensity (e.g., facility produced a different product, removed a product, added or removed a site, changed the import of thermal energy).
• Technical and administrative changes (e.g., clarifying definitions).

Rationale 

• Would provide more flexibility for facilities by allowing a baseline emissions intensity that better reflects their actual operations.