News Article

New Greenhouse Gas Reporting Requirements

Jacqueline Gons, Associate, Tavares Group Consulting Inc.

18 June 2009

Strict new greenhouse gas (GHG) reduction and reporting requirements coming into effect as early as 2010 will put Ontario ahead of the curve in the fight against climate change for jurisdictions in North America.  Tabled 27 May 2009, Bill 185 (Environmental Protection Amendment Act: Greenhouse Gas Emissions Trading), paves the way for the development of a GHG cap-and-trade¹ system with requisite reporting requirements, that is aimed at assisting the province meet its climate change commitments of reducing GHG emissions by six percent below 1990 levels by 2014, and 15 percent by 2020.

Bill 185, which is anticipated to be implemented by 2010, amends existing legislation, instituting hard caps on the absolute level of permitted emissions, ensuring equitable treatment between capped sectors, and emphasizing compatibility with other systems. Key issues include:

• a definition of GHGs that includes carbon dioxide, methane, and nitrous oxide;
• regulation-making powers for establishing the scope of the system, persons and facilities included in the system, and monitoring and reporting requirements beginning in 2010;
• regulation-making power to establish allowances and offset credits, as well as distribution, use, trading and retirement of credits; and
• integration with other cap-and-trade systems to provide emissions reductions at lower cost while improving innovation and increasing trading volumes.

Discussions between the Province of Ontario, environmental groups, and nine industrial sectors including base metal, cement, chemical, electricity, lime, natural gas, petroleum, pulp and paper, and steel, have contributed to the development of the cap-and-trade system. At present, the Bill broadly outlines the framework of a provincial cap-and-trade strategy, but details of the plan remain to be developed in future regulations.

Integral to Bill 185 is the ability to link the provincial cap-and-trade system to those of other jurisdictions, including those in the Western Climate Initiative (WCI), a multi-sector initiative including British Columbia, Quebec, Manitoba and seven U.S. states, for the purpose of establishing a regional GHG cap-and-trade system. A member since July 2008, Ontario is committed to be part of the regional WCI system which is expected to come into effect in 2012. Under WCI, mandatory reporting will be required for all entities and facilities with emissions equal to or greater than 10,000 metric tons/year of CO2e², to begin in 2011 for the 2010 reporting year. The first phase of the cap-and-trade program will begin in 2012, with a three-year compliance period. At present, Ontario is considering subjecting reported emissions to government audit, or requiring independent third party verification. Ontario plans to harmonize its compliance periods with WCI, with a short compliance period from 2010-2011, and future compliance periods based on the 3-year WCI compliance period.

On June 10, 2009 the federal government released for comment draft guidance on a proposed Canadian offset system for GHG’s. Under the proposed system, offset credits would be issued to Canadian projects that reduce or remove GHG emissions when not required by law to do so. Project proponents would then have the option to sell the credits. Projects to be included in the system would go through a five-part process that includes:

• creation of a quantification protocol
• project registration
• implementation of the project, and monitoring of data
• reporting and verification of GHG reductions
• certification of reductions and issuance of offset credits by Environment Canada

Following public consultation and finalization of the Canadian offset system, Environment Canada is expected to explore means to harmonize the federal and provincial offset systems, to ensure the equitable and efficient function of the carbon trading market in Canada.

Data collected as part of carbon-reduction initiatives including the WCI and those of individual jurisdictions is collected by The Climate Registry (TCR), a nonprofit organization that records and tracks the GHG emissions of entities within its member states and provinces. The independently verified data is used to provide meaningful information to reduce GHG emissions through consistent, transparent standards. The Climate Registry encourages members to utilize best practices in GHG emissions reporting. By providing an opportunity for members to establish emissions baselines, TCR allows for the development of a recognized platform for credible and consistent GHG emissions reporting. In January 2009, WCI endorsed TCR to manage the WCI’s regional database, using a modified version of TCR’s Climate Registry Information System (CRIS) to support mandatory reporting, as a central repository for GHG data.

Cap-and-trade is the GHG emissions reduction strategy under development in North America. For this reason, Ontario is moving towards a flexible cap-and-trade system to meet both environmental and economic needs. The result of a consistent approach that will align with other jurisdictions will be a common trading system to ensure parity for Ontario’s industries and its competitors.

Tavares Group Consulting provides GHG inventory and auditing services. Contact us for more information.