Notice of intent to amend the Output-Based Pricing System Regulations

Purpose

The purpose of this notice is to announce the intent to amend the Output-Based Pricing System Regulations (OBPS Regulations), made under sections 192 and 193 of the Greenhouse Gas Pollution Pricing Act (the Act). The amending regulations would implement the measures set out below taken in response to the coronavirus disease (COVID-19).

Pursuant to section 194 of the Act, the measures referred to in this notice may take effect, if the amending regulations so provide, earlier than the day on which the amending regulations are made. Subject to Governor in Council approval, it is anticipated that these amending regulations would be made in 2020 and that they may take effect as early as the date of publication of this notice.

If the Governor in Council makes these amending regulations, they would apply to persons responsible for facilities that meet the definition of “covered facility” set out in section 169 of the Act.

Context

The OBPS Regulations, established under Part 2 of the Act, were published in the Canada Gazette, Part II, Vol. 153, No. 14, on July 10, 2019. The Minister of the Environment also published a Notice of Intent on December 20, 2018, that allowed the OBPS Regulations to take effect on January 1, 2019, except in Yukon and Nunavut where they took effect on July 1, 2019, prior to the final publication of the regulations.

On March 11, 2020, the World Health Organization declared COVID-19 to be a pandemic. As a result, the Government of Canada and the governments of the provinces and territories in Canada have taken unprecedented measures to reduce the spread of COVID-19 in order to protect the health of millions of Canadians. Measures like physical distancing, self-isolation and travel restrictions affect the capacity of persons responsible for covered facilities to meet certain requirements of the OBPS Regulations.

The Government of Canada considers pricing carbon pollution as the most efficient way to reduce greenhouse gas emissions and stimulate investments in clean innovation. However, it recognizes that the impacts of COVID-19 on company operations is significant, and in some cases has made reporting and compliance more challenging. Therefore, the Minister of the Environment intends to develop regulations amending the OBPS Regulations (the amending regulations) that would give effect to the potential measures described below, for recommendation to the Governor in Council.

Description of potential measures and relevant provisions

Deadline for submission of annual report

Section 173 of the Act requires the person responsible for a covered facility to submit, for each compliance period, an annual report that contains the information prescribed in the OBPS Regulations and to have the report verified by a third party. Section 13 of the OBPS Regulations specifies that this annual report must be provided on or before June 1 of the calendar year following the end of the compliance period for which the annual report is prepared along with the verification report prepared in accordance with section 52 of these regulations. The first compliance period under the OBPS Regulations ended on December 31, 2019; therefore, the first annual report under the OBPS Regulations is required to be submitted on or before June 1, 2020. The amending regulations would postpone this deadline by four months and require that the annual report related to the 2019 compliance period be submitted on or before October 1, 2020.

Regular-rate and increased-rate compensation deadlines

Section 174 of the Act requires a person responsible for a covered facility to provide compensation for the GHG emissions emitted in excess of the facility’s emissions limit by the increased-rate compensation deadline^{Footnote 1}. Compensation may also be provided at the regular rate by the regular-rate compensation deadline. Subsection 57(1) of the OBPS Regulations provides that the regular-rate deadline is December 15 of the calendar year in which the related annual must be submitted. This means that the regular-rate compensation deadline is December 15 of the calendar year following the compliance period. Subsection 57(2) of the OBPS Regulations provides that the increased-rate compensation deadline is February 15 of the calendar year following the regular-rate compensation deadline. The amending regulations would delay these deadlines, for the 2019 compliance period, by four months. Therefore, the regular-rate compensation deadline for the 2019 compliance period would be April 15, 2021, instead of December 15, 2020 and the increased-rate compensation deadline would be June 15, 2021, instead of February 15, 2021.

Coming into force

The Act permits the amending regulations to have effect retroactively. However, the regulations must not have effect before the day on which this Notice is published.