Ontario, B.C. Release New Greenhouse Gas Reduction Plans

The governments of Ontario and British Columbia recently released new environmental plans that will guide the development of environmental legislation and policies in each province for the foreseeable future. Ontario released the Preserving and Protecting our Environment for Future Generations: A Made-in-Ontario Environment Plan (Proposal) and B.C. released its CleanBC plan. These plans will lead to economic opportunities for certain industries, while increasing regulation and the cost of doing business for other industries.

ONTARIO PROPOSAL

Background

The Cap and Trade Cancellation Act, 2018 (which was enacted to cancel the cap-and-trade system that had been implemented by the previous Ontario government) requires the establishment of targets for reducing the amount of greenhouse gas (GHG) emissions in Ontario. It also requires the preparation of a climate change plan and progress reports in respect of the plan. The Ontario proposal, said to address Ontario’s legislative obligation to prepare a climate change plan, identifies four main areas of potential action where Ontario may develop new laws relating to environmental and climate protection: 1) addressing climate change; 2) protecting Ontario's air and water; 3) reducing waste and litter; and 3) conserving land and greenspace.

Ontario intends to begin implementation of the initiatives in its proposal following public consultation, and no new regulations have been introduced yet. The deadline for submitting comments on the Ontario proposal expires on January 28, 2019.

Highlights

The Ontario proposal states that the province’s environmental actions will be based on three guiding principles: clear rules and strong enforcement, trust and transparency, and resilient communities and local solutions.

1. Emission performance standards for large emitters: Ontario is proposing to establish emission performance standards for large emitters that will be linked to their level of output or production. This approach is to take into consideration specific industry and facility conditions. The plan is to require improvements from sectors that have room to improve. Each large industrial emitter will be required to demonstrate compliance on a regular basis. The Proposal states that the emission performance standards program “may include compliance flexibility mechanisms such as offset credits and/or payment of an amount to achieve compliance”. The Proposal does not contain any additional detail about the possible credits and payments, but it appears that the program could include payments or subsidies to industrial emitters to help them pay for new technology or retrofits to achieve compliance with new emission standards.
2. Emission reduction fund: Ontario is also proposing to establish an emission reduction fund known as the Ontario Carbon Trust. The province will commit to providing the Carbon Trust with C$400-million over four years, and any penalties paid by polluters are also to be paid into the Carbon Trust. The Carbon Trust is to be used to provide “innovative financing techniques” in partnership with private businesses to stimulate private sector investment in low-carbon solutions.
3. Reverse auction: The Proposal includes a plan to implement a “reverse auction” in which bidders will be able to submit proposals for emission reduction projects and compete for contracts based on the lowest-cost GHG emission reductions.
4. Encouraging private investment: Ontario intends to encourage private investments in clean technologies by making changes to its tax laws that will be similar to changes made by the Canadian government to the Accelerated Capital Cost Allowance. These changes aim to make technology investments in clean energy generation and energy conservation equipment more attractive.

CLEANBC PLAN

Background

On December 5, 2018, B.C. released its CleanBC plan aimed at reducing GHG emissions, while supporting the growth of clean and renewable energy industries in the province. The CleanBC plan was developed to help achieve B.C.’s legislated climate targets of reducing GHG emissions by 40 per cent by the year 2030 (based on 2007 levels). The CleanBC plan is the first part of a longer-term strategy and aims to allow B.C. to reach 75 per cent of its 2030 target. Over the next 18 to 24 months, B.C. will identify additional reductions to help the province meet or exceed the remaining 25 per cent of its 2030 goal. A new round of engagement will begin in 2019 to inform the next steps of CleanBC.

Highlights

The CleanBC plan focuses on key actions in the transportation, building, waste management, and clean industry sectors including:

1. Cleaner Transportation: By 2020, B.C. will require automakers to meet an escalating annual percentage of new light-duty zero-emission vehicle sales. By 2040, all new light-duty cars and trucks sold in B.C. must run on clean electricity. The province will also offer new incentives for clean energy vehicles and infrastructure and will encourage the private sector’s role in this infrastructure development. After 2025, new vehicles will be subject to increasing tailpipe emissions standards. By 2030, fuel suppliers will be required to reduce the carbon intensity of diesel and gasoline by 20 per cent. B.C. will also work with renewable fuel providers to increase new production of renewable fuels by 2030.
2. Better Buildings: By 2032, all new buildings constructed in B.C. will be “net-zero energy ready” (all or most of the building’s own energy consumption requirements can be met with onsite renewable energy technologies). New standards for building upgrades will be developed and new energy efficiency standards will be set for space heaters, water heaters and residential windows. The EfficiencyBC program will be expanded and, starting in 2019, B.C. will offer new incentives for builders, developers and manufacturers to stimulate innovative, low-carbon building solutions. The CleanBC Communities Fund will be established to encourage investments in small-scale, community-owned renewable energy generation projects, and the fund will start accepting applications in 2018.
3. Improved Waste Management: B.C. will implement a minimum requirement for 15 per cent renewable content in natural gas by 2030 and will also work with communities to achieve 95 per cent organic waste diversion from municipal, industrial, and agricultural sources by 2030.
4. Cleaner Industry: B.C. signed a memorandum of understanding (MOU) with the Business Council of British Columbia, setting out a framework to develop a low-carbon industrial strategy. The MOU commits both parties to keeping energy-intensive, trade-exposed industries competitive. The CleanBC program will also direct a portion of B.C.’s carbon tax paid by industry into incentives for cleaner operations. The incentive program and the fund will begin operating in 2019 and is designed for regulated large industrial operations, such as pulp and paper mills, natural gas operations and refineries, and large mines. The B.C. Oil and Gas Commission is also developing regulations to reduce methane emissions in the upstream production of natural gas by 45 per cent by 2025, and B.C. is planning to develop a regulatory framework for underground carbon dioxide storage, both for the natural gas sector and for direct air capture.

For further information, please contact:

Nardia Chernawsky                               
Sharon Wong                                        416-863-4178

or any other member of our Environmental Law group.