On April 16, 2024, the Ministry of the Environment, Conservation and Parks (MECP) announced regulatory amendments to Ontario’s Emissions Performance Standards (EPS) Program, which came into effect on January 1, 2022. Facilities in Ontario must register in the EPS Program if they exceed greenhouse gas (GHG) emissions of 50,000 tonnes carbon dioxide equivalent (tCO2e) or more and engage in certain industrial activities listed in Schedule 2 of the EPS Regulation.

The amendments will not incur extra compliance costs for registered facilities and are expected to reduce the regulatory burden for program participants. To learn more about the program, see our previous blog post here.

Details of the Regulatory Amendments to the EPS Program

The regulatory amendments to the EPS Program introduce key changes to enhance fairness, ensure consistency, and alignment to the federal benchmark:

1. Addition of High-Risk Industrial Activities:

  • Industries prone to relocating due to less strict climate policies are identified.
  • Newly added industries include NAICS 3273 (Cement and concrete product manufacturing), NAICS 3328 (Coating, engraving, cold and heat treating and allied activities), and NAICS 33591 (Battery manufacturing).
  • Facilitates can register in the EPS program and apply for federal carbon charge exemption.

2. Assigning and revoking Baseline Emissions Intensities (BEI):

  • BEI assignment and revocation processes are streamlined by moving the BEI application process from the Methodology to the Regulation
  • Introduction of new BEIs for certain facilities to align with current operations.
  • Ensures fairness, consistency, and administrative efficiency in output-based standard development.

3. Clarification of Method Applicability:

  • Adjusted eligibility criteria for consistent application of thermal energy methods across sectors
  • Clarified treatment of cogeneration system thermal energy, permitting transfers to another EPS facility for a non-cogeneration system boiler
  • Enhanced clarity and application by rewording terminology for activity and EPS components
  • Introduced a new performance standard for the steel sector under Method G
  • GHGIDs in Appendix B, not listed under Column 1 of Table B1, may apply any applicable performance standard.

4. Expanding Eligibility for Renewable Natural Gas (RNG):

  • Amended the GHG Reporting regulation to allow deductions of carbon dioxide emissions from RNG purchased by EPS facilities and added to Ontario’s natural gas pipeline system.
  • Included new subsections in the Standard Quantification Method to ensure clear reporting, quantification, and record-keeping requirements.
  • Supports RNG use in Ontario, provides emission reduction opportunities for EPS facilities, ensures fairness in biomass treatment, and prevents double counting.

5. Addressing Temporary Shutdowns:

  • Amended the GHG Reporting regulation and Guideline to reduce verification amount for EPS facilities during shutdown periods if there is zero production for at least 180 consecutive days, and more than one notice of temporary shutdown has been issued.
  • Facilities must request adjustment by January 31 of the following calendar year.
  • Provides compliance relief during temporary shutdowns, aligns with program intent to hold polluters accountable, and minimizes competitiveness impacts.

These changes collectively aim to improve program implementation, enhance clarity, and streamline emissions reduction efforts within the EPS Program.

Implications of the Amendments & Next Steps

For existing participants in the Program, compliance requirements remain largely unchanged. Ontario businesses anticipating emissions of 10,000 tCO2e or more within three years after a retrofit or expansion should consider Program application to receive relief from fuel charges.

Most amendments to the GHG Reporting Regulation and Guideline take immediate effect for the 2023 compliance period. However, changes facilitating the use of renewable natural gas (RNG) in the EPS program begin with the 2024 compliance period.

Industries newly added to the Program, including NAICS 3273 (Cement and concrete product manufacturing), NAICS 3328 (Coating, engraving, cold and heat treating and allied activities), and NAICS 33591 (Battery manufacturing), must pay particular attention to the Amendments and begin taking steps to comply with Program requirements.

Facilities with substantial compliance obligations should explore emission reduction options. The federal government’s plan to establish a minimum national carbon price of $170 per tonne by 2030 may impact operations financially, but also presents opportunities for emission reduction technologies and projects.

Easily navigate the EPS program with Blackstone

For over 20 years, Blackstone has helped numerous companies and organizations manage, conserve, and report on their carbon emissions to ensure they comply with current regulations and understand potential changes in regulations that have an impact on your operations.

To learn how our carbon experts can support your EPS facility and ensure carbon reporting mandates, please reach out to us at policyandregulatory@blackstoneenergy.com.