Canada: Ontario Reveals The Details About Its Performance Standards For Large Industrial Emitters

On February 12th 2019, Ontario announced its proposed plan to reduce greenhouse gas ("GHG") emissions, the Industrial Emissions Performance Standards Program ("EPS").1

This is the latest development in Ontario's new approach to climate change, following:

In this article, we take a closer look at Ontario's new EPS plan, building on our recent analyses of unfolding Federal and Provincial climate policy.

  1. Industrial Emissions Performance Standards

Ontario's proposed EPS would apply annual emission limits on facilities, processes or equipment that emit GHGs.2 These emission limits would be different depending on the sector or industry.3 Emitters would be charged for exceeding those limits, and be granted tradeable credits when they emit less than the limit.4

The EPS closely resembles Saskatchewan's recently announced Climate Change Strategy, which rejects a carbon price in favour of flexible Output-Based Performance Standards (not to be confused with the Federal government's Output-Based Pricing System ("OBPS")). EPS also resembles the New Source Performance Standards regime implemented by the United States Environmental Protection Agency.5

  1. Who must comply with the EPS?

Ontario's EPS targets the same GHG-emitting sectors as the Federal OBPS and fuel charges. These include: (1) electricity, fuel, and energy sectors; (2) food sectors; (3) certain institutions; (4) certain chemical sectors; (5) metal, cement, lime and mineral sectors; (6) pulp & paper; and (7) vehicle manufacturing, among others.6

The EPS will only apply to larger facilities, namely those that exceed a certain threshold of annual emissions (likely 25,000 or 50,000 tonnes per year of carbon dioxide (CO2) equivalent emissions, depending on the sector).7

  1. How do businesses comply?

The EPS is 'Sector-Based', meaning that the emissions limit will vary by sector.8 Ontario has not yet determined these emission limits. Ontario has also proposed stringency exceptions for the electricity-generation sector and for natural-gas-based thermal energy generation.9

Emitters that fail to comply with their annual limit will be required to pay for 'Compliance Units' for each tonne of excess CO2. Ontario has proposed a cost for Compliance Units of $20 per tonne in 2019, increasing by $10 per year to a maximum of $50 per tonne in 2022.10

Emitters who emit less than the limit can generate Compliance Units, which can then be sold to non-compliant emitters. Ontario has also proposed to develop an offset crediting system for unregulated parties who voluntarily reduce emissions or remove carbon.11

  1. EPS vs. carbon pricing

So what makes the EPS unique? Is it a carbon cap-and-trade system by another name? Not exactly.

The EPS is a performance standard. The EPS and carbon pricing (i.e. a cap-and-trade system or a carbon tax) are both a means of encouraging emitters to reduce emissions. The key difference is that a carbon price applies a market-wide standard across all industries, whereas performance standards apply differently to each industry. In addition, unlike a carbon tax, the EPS does not put a price on each tonne of GHG emitted. Costs for emission are only incurred if a particular emitter exceeds its industry-specific target. However, all emissions below that threshold are free.

Performance-based standards may therefore result in lower costs to industry participants and are intended to consider trade exposure and competitiveness. Critics often counter that performance based standards can be less effective at reducing emissions, especially when less stringent emissions limits are used.

  1. Implications for the Federal backstop program

As we have discussed in previous articles, the Greenhouse Gas Pollution Pricing Act ("GGPPA") (also called the "Federal Backstop"), is the Federal carbon pricing program. The GGPPA imposes minimum requirements on Provincial carbon pricing programs. Where Provinces fall short of the Federal standard, the Federal backstop will apply either (1) a charge on fossil fuels for fuel producers, distributors and importers or (2) an output-based pricing system for industrial facilities.

Following Ontario's termination of cap-and-trade, Canada has begun to apply its Backstop in Ontario. Assuming Ontario's proposed EPS is enacted, Canada will reassess whether Ontario meets the Federal standard. However, Ontario's EPS may not ward off federal intervention if it is considered less stringent than the GGPPA. If Canada's approach to Saskatchewan's performance standard is any indication, Canada has said that it will apply the GGPPA backstop in Saskatchewan "to the emissions sources not covered by Saskatchewan's system".12 Then again, Saskatchewan's performance standards are more limited than Ontario's, only applying to Saskatchewan's largest facilities.

The fate of the EPS and the Federal Backstop will also depend on the outcomes of both Ontario's and Saskatchewan's pending challenges to the constitutionality of the GGPPA. If the GGPPA is stuck down by the Courts, the EPS would stand. If the GGPPA is upheld, the EPS will be vulnerable to Federal intervention.

  1. Conclusion

Ontario's proposed EPS presents an important regulatory consideration for any industry that emits GHGs. The scale of its regulatory demands will depend on how the Province sets the sector-specific GHG emission limits and the price of Compliance Units.

Even if enacted, however, the EPS's fate is closely tied with that of its Federal counterpart, the GGPPA, whose constitutional validity is still pending.

The proposal has been posted on the Environmental Registry of Ontario for a 45-day public comment period, concluding on March 29, 2019. Ontario aims to have the EPS apply to emitters by as early as 2020.


1 Government of Ontario, Making Polluters Accountable: Industrial Emission Performance Standards (February 2019), online: EPS.

2 EPS, s. 3.0.

3 EPS, s. 3.1.1. An emitter's annual emissions limit will be a function of its industry performance standard. An industry performance standard will be calculated by multiplying the average emissions rate for that industry by a "Stringency Factor", as determined by Ontario. The latter factor represents the fraction of a sector's average emissions that Ontario will permit in a given year.

4 EPS, s. 4.0.

5 See New Source Performance Standards under Section 111 of the USA's Federal Clean Air Act and 40 CFR Part 60 Regulations.

6 See the more detailed list in the EPS, s. 2.1.

7 GHGs other than CO2 will be quantified based on their equivalence to the 'Global Warming Potential' of CO2, as guided by Ontario's pre-existing Regulations for Greenhouse Gas Emissions: Quantification, Reporting and Verification.

8 EPS, s. 3.1.1. See footnote 3.

9 EPS, s. 3.1.2.

10 EPS, s. 4.0. Note that these are the same price levels as set by the federal government in its carbon pricing regime.

11 EPS, s. 4.0.

12 Government of Canada, "Saskatchewan and pollution pricing" (November 23, 2018), online:

Read the original article on

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
7 Nov 2019, Seminar, Birmingham, UK

Providing content specifically tailored to the needs of GCs and Heads of Legal working in government organisations and their affiliates.

14 Nov 2019, Seminar, London, UK

Providing content specifically tailored to the needs of GCs and Heads of Legal working in government organisations and their affiliates.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions