Ontario brewers see allocation boost in proposed ETS rule changes

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The Ontario government is proposing a number of rule amendments in its nascent ETS, with beer brewers and a handful of other industries poised to be affected by the changes.

In its proposal published on Wednesday, the provincial government calls for changes including allowing beer producers to receive free Ontario Carbon Allowances (OCAs) for emissions from onsite cogeneration facilities on top of those generated from the brewing process.

“The proposed benchmark for electricity generation will be 0.2219 allowances for each MWh of electricity generated,” the proposal said.

The government also proposed that:

  • Installations that receive indirect useful thermal energy, for example imported steam, and pass some of it on to other facilities be eligible for free OCAs only for the portion of the energy they use.
  • All emissions from the combustion of natural gas delivered to a participant with a compliance obligation bear a compliance obligation. “This addresses a unique situation in which no entity has a compliance obligation in respect of greenhouse gas emissions where natural gas that is delivered to a capped participant is subsequently transferred to an entity that is not subject to a compliance obligation,” the government said.
  • The compliance obligations from process fuels from iron and steel production is imposed on the iron and steel producer even in situations where the process fuels have been transferred from one facility to another facility prior to combustion and resulting emissions.

In addition, the government singled out a handful of facilities that should see their allocations be based on production or historical emissions intensity instead of energy consumption or historical absolute emissions.

The installations included those owned by used oil product recycler Safety-Kleen Canada, household tissue product maker Irving Consumer Products, insulation producer Roxul Inc., ethanol producer Greenfield Specialty Alcohols, and Strathcona Paper.

The government also suggested a number of amendments to its emission reporting and verification regulations and guidelines.

It said some of the proposed changes will help minimise the risk of carbon leakage, maintain fairness and equality amongst the capped industries, and facilitate a move towards using only production-based OCA allocation methods.

The proposal is now subject to a 45-day consultation period, after which stakeholder comments will be considered prior to final decisions being made on the changes.

Ontario launched its emissions trading scheme in January and executed its first OCA auction last month.  The province is aiming to link its market next year with those in California and Quebec under the WCI programme.

By Mike Szabo – mike@carbon-pulse.com