The objective of the federal Output-based Pricing System (OBPS) is to provide a price signal that incents reductions while minimizing competitiveness and carbon leakage risks for emissions intensive, trade exposed (EITE) industries. ECCC has received many comments on the approach to developing output-based standards under the federal OBPS and the importance of limiting carbon pricing competitiveness impacts on EITE industries. As a result of feedback and further analysis, ECCC is revising the starting point for output-based standards from 70% to 80% for all sectors. In some cases, further adjustment of sectoral standards may be made for sectors that are assessed to be at relatively higher risk. Sectors assessed to be at high risk from an output-based standard set at 80% will have their standard moved to 90%.
Further information on these changes is provided in the attached documents.
The proposed treatment of electricity generation continues to be assessed. No changes are proposed at this time.
ECCC has conducted analysis for Phases 1 and 2, which assess emissions intensity and trade exposure using static and dynamic quantitative tests for industrial sectors with an output-based standard set on the basis of 80% percentage of the national average emissions intensity. Initial results using public and ECCC data are presented in the attached documents. Sectors assessed to be medium or low risk in Phases 1 and 2 will still be considered for adjustment as part of Phase 3. Data that has been submitted through sector working groups will be considered during Phase 3.
For the Phase 3 competitiveness assessment, facilities and sectors are invited to submit any additional information and analyses on aspects of competitiveness that should be taken into account before the sector output-based standards are finalized. Some of the information that could be provided to support the Phase 3 analysis includes:
- Information on the location of key domestic and international competitors and whether they face costs from carbon pricing or other GHG regulations;
- Information to help put carbon costs into context, for example, facility level profits / revenue / operating costs;
- Data on the indirect costs from carbon pricing, such as:
- Facility-level electricity usage in the sector;
- Reliance on ground transport by facilities in the sector (i.e., cost for transport of freight relative to total operating costs);
- Production and emissions data by facility, if not previously provided as part of earlier submissions.
The information must be submitted to Daniel Lemire (and Mihaela Andronescu) via [email protected] by August 10, 2018 in order to be considered at this stage. ECCC officials will be available to discuss sector-specific competitiveness issues upon request. To request a meeting, please contact us via email at [email protected].
The intention is to return to sector working groups in August with draft output-based standards that are informed by stakeholder feedback and analysis of all three phases. The release of draft regulations, including draft output-based standards is targeted for fall 2018. Opportunities to provide feedback on draft standards will continue through fall 2018 and winter 2019 as ECCC works to finalize OBPS regulations, targeted for spring 2019.
Thank you for your continued engagement in support of the development of the federal OBPS.
Daniel Lemire P.Eng., M.Sc.A.
Acting Section Head, Forest Products and Fisheries Act Division / Environmental Protection Branch
Environment and Climate Change / Government of Canada
[email protected] / Tel: 819-938-4214